UPDATE 1-BoE's Saunders expects more stimulus for COVID-hit UK economy

(Adds comments, background)

LONDON, Sept 4 (Reuters) – Bank of England interest rate-setter Michael Saunders said on Friday that it was “quite likely” that more stimulus will be needed for Britain’s COVID-hit economy in a downbeat speech on the outlook.

“I consider it quite likely that additional monetary easing will be appropriate in order to achieve a sustained return of inflation to the 2% target,” Saunders said.

Growth was likely to disappoint relative to the BoE’s forecasts published last month, Saunders said.

He said an ongoing recovery was the result of a “benign window” – the combination of huge government spending and the relaxation of lockdown measures.

“This window may now be closing,” Saunders said, adding that a downside scenario for the economy would be “very costly”.

On Wednesday, BoE Deputy Governor Dave Ramsden and another rate setter, Gertjan Vlieghe, also warned the economy could suffer more damage from the coronavirus crisis than spelt out by the central bank last month.

Many economists expect the BoE to announce a latest ramping-up of its bond-buying programme in November.

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