Growth forecasts should have been cut sooner, admits King
Tuesday 27 November 2012
Bank of England governor Sir Mervyn King today admitted policymakers should have cut growth forecasts sooner.
Discussing the Bank's latest quarterly inflation report, the governor told MPs the Bank had "inadvertently given too much weight" to optimistic growth forecasts.
Sir Mervyn said there was little chance of rapid growth in 2013 or 2014, adding it "may be unreasonable to expect anything other than a slow and protracted recovery".
In an apparent endorsement of the decision to appoint Bank of Canada governor Mark Carney as his successor, he told the Treasury Select Committee he was "completely confident" the central bank would be left in "very good hands".
The Bank warned in its inflation report earlier this month that economic growth would remain below pre-financial crisis levels for at least the next three years.
Taking the shine off a recent return to growth between July and September, Sir Mervyn said output could shrink again in the final three months of the year.
And the governor braced households for an "unappealing combination" of sluggish growth and above-target inflation.
The Bank downgraded its growth forecast for next year to around 1% and warned that output will remain below its historical average until mid-2015.
In a grilling by committee chairman Andrew Tyrie, Sir Mervyn said forecasts should have been lowered earlier.
"There are times when you debate something and we finally decided our judgment has to change," he said.
Sir Mervyn also admitted the impact of the Bank's quantitative easing programme - injecting emergency money into the economy - becomes less effective the longer it is used.
He added the UK is "reaching the point where it is difficult for conventional monetary policy measures, including asset purchases, to bring spending forward from the future".
The Bank has injected £375 billion into the economy, which Sir Mervyn said had staved off the risk of a much deeper collapse in output in the UK.
- 1 Disney heiress Abigail disowns her share of family profits in West Bank company
- 2 The secret report that helps Israel hide facts
- 3 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 4 Ebola virus: UK health officials issue warning to doctors as experts admit the outbreak 'is not under control'
- 5 Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
Richard Dawkins says 'date rape is bad, stranger rape is worse' on Twitter
Ross Burden dead: MasterChef and Ready Steady Cook star dies at age 45 after suffering from cancer
Zayn Malik on Israel-Gaza: One Direction singer bombarded with Twitter death threats after posting #FreePalestine
MH17 crash: Black boxes show plane suffered 'massive explosive decompression' following shrapnel hit
The secret report that helps Israel hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
- < Previous
- Next >
iJobs Money & Business
£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...
£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...
£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...
£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...