11.11.2009
The Governor of the Bank of England (BoE) Mervyn King has said that the strength of any recovery in the UK recovery remains “highly uncertain” in what was quite a gloomy quarterly inflation report published today.
The BoE is now expected to keep monetary policy steady for an extended period, as what the bank’s Monetary Policy Committee sees as a “slow” economic recovery begins to take hold.
“A recovery in output is likely, driven by the considerable stimulus from the past easing in monetary and fiscal policy and the depreciation of sterling,” the bank said in its inflation report.
“But constraints on the supply of bank credit and concerns over balance sheets will weigh on spending.
“A degree of economic slack is likely to persist over the forecast period, although its extent will depend on the strength of the recovery and on developments in supply, both of which remain highly uncertain,” the BoE said.
The BoE also noted that while inflation fell 1.1pc in September, it is likely to rise sharply above the bank’s 2pc target in the near-term.
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