The Bank of England (BoE) may have been given the green light to use "unconventional monetary policy instruments" and overshoot its two percent inflation target in the U.K's annual budget on Wednesday, but it actually needs to engage in some monetary policy "realism", Andrew Sentance, senior economic advisor at PwC, told CNBC.
In his annual budget statement on Wednesday, the U.K.'s finance minister, George Osborne, said that the Bank of England (BoE) could use more "unconventional" monetary policy to help the country return to growth, even if it caused inflation. "As we've seen over the last five years, low and stable inflation is a necessary but not sufficient condition for prosperity," Osborne said as he presented the budget in the U.K.'s parliament yesterday.
(Read More: The UK Budget Did No Favor to the Pound)
Andrew Sentance, a former member of the Bank of England's monetary policy committee, told CNBC Europe's "Squawk Box" that the central bank would need to end its 375 billion pound ($567.1 billion) quantitative easing program soon.
"The Chancellor was using this phrase which he and David Cameron (the U.K. prime minister] have used a lot in the past which is 'monetary activism' and I wonder what this means in the current climate when interest rates have been at 0.5 percent for the last four years and you've already got a third of the government's debt sitting in Bank of England's vaults," Sentance said.
"That's a pretty activist monetary policy in my view, and one that has already gone too far. Instead of monetary activism we need monetary realism," he said, adding that Mark Carney, the incoming head of the BoE, would have to address some sort of exit from loose monetary policy.