April 9, 2013 / 8:48 AM / 4 years ago

UPDATE 1-Central banker Fisher sees some hope for UK economy

* Says asset purchases should continue while FLS gathers pace

* "Glimmers of hope" that UK economy may be on the mend

* FLS should boost 2013 lending but banks may be too tough

* Voted for more QE in February, March

LONDON, April 9 (Reuters) - Britain's economy still needs support from more central bank asset purchases, although there are signs that growth should pick up this year after two years of stagnation, a Bank of England policymaker said.

Paul Fisher, the central bank's executive director for markets, told Scotland's Herald newspaper that Funding for Lending was improving conditions for borrowers, but that the economy still needed other help until that scheme got up to full steam.

Fisher and two others on the bank's nine-member Monetary Policy Committee voted for more quantitative easing via bond purchases in February and March.

"We need some sort of background level of QE to see us through this period, particularly while FLS has its full impact for the remainder of this year," Fisher said in an interview published on Tuesday.

The central bank launched FLS last year to address the problem of its asset purchases not easing lending conditions for smaller businesses and households.

Fisher and two others on the MPC voted for 25 billion pounds of extra gilts purchases in February and March, on top of the 375 billion pounds bought between March 2009 and October 2012.

Minutes of April's meeting, to be published next week, will show whether he did so again.

Fisher was cautious about any benefits from more quantitative easing than what he had recently advocated.

"I don't know whether it would have a huge impact," he said.

"There are limits to what monetary policy can do. Nobody has actually given us any new toys to play with in terms of trying to promote the economy," he added, referring to a modest change in the central bank's remit last month.

Fisher said he was hopeful that contractions in construction and North Sea oil output would stop this year, giving "glimmers of hope" that the economy was on the mend.

Banks expected a reasonably big expansion in lending but Fisher - who is in charge of the FLS - was more doubtful.

"I am not quite as optimistic ... but I would expect lending to go up," he said.

"The big banks are saying it has been a powerful influence on their funding costs ... but they say they are struggling to find businesses to whom they are willing to lend," he added. "In part this may be because their credit assessments are still being too severe, that is a matter to look into."

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