Bank deputy: More action needed
Friday 16th January 2009, 11:23AM GMT.
More action may be needed to tackle the financial crisis, the deputy governor of the Bank of England said.
In a speech at the Cityco breakfast meeting in Manchester, deputy governor Sir John Gieve said measures taken so far to bail out the banks have shown signs of success but there are still risks to the banking system.
“Therefore, in setting policy, the authorities both here and overseas need to consider whether further action on interest rates (or other monetary measures) or fiscal action is required,” Sir John told delegates.
This recession is unlike past recession, Sir John said in the speech, and required intervention to prevent a systemic collapse.
Sharp falls in the share prices of banks this week highlight renewed fears for the sector, Sir John added.
It is thought the government is considering a bold move to unfreeze credit markets by buying up bad debts through a taxpayer funded ‘bad bank’.
Gordon Brown said action on impaired assets is needed if the economy is to start recovering and ministers are thought to be meeting with bankers this weekend to work out a plan.
The comments may also be seen as a strong hint that the Bank’s monetary policy committee (MPC), of which the deputy governor is a member, is considering further interest rate cuts.
Currently, the rate is at a historic low of 1.5 per cent.
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