–‘Perfectly Reasonable’ Case For Raising Rates Now
–But Is Question Of Looking Ahead 18 Months And Assessing Risks
–Says Can’t Argue That ‘What Britain Needs Is A Deeper Recession’
–Comments From Interview With Daily Telegraph
–Says Returning Inflation To Target Was Reason He Stayed On At BOE Helm
LONDON (MNI) – Bank of England Governor Mervyn King remains a
‘hawk’ on inflation, the governor told the Daily Telegraph in an
interview published over the weekend.
In answer to a question as to whether he remains a ‘hawk’ given his
more recent reputation in the media, King replies:
“Yes. It’s odd to read that I am terribly doveish. Before the
crunch, there were 14 occasions where I was in a minority in voting for
higher rates. Since then, there has been one occasion where I was in a
minority the other way.”
The newspaper reports that King is insistent that he wants to
return inflation to its 2% target and that he says this was the reason
why he stayed on at the helm of the BOE for a second term.
“That is why I stayed at the Bank [for his second term].”
King is due to leave the BOE in 2013.
“After this, the worst financial crisis in living memory, “if
people can look back and say that inflation came back in line, that
would be a very significant achievement”.
During the interview, the paper says that King reiterated that the
squeeze on UK living standards is “inevitable” because of the rise in
oil prices and the need to reduce the deficit, adding that, in terms of
the debate on rate policy:
“One cannot argue that ‘what Britain needs is a deeper recession’.
Of course, rates will have to rise at some point and there is a
‘perfectly reasonable case for doing it now’, but it is a matter of
looking ahead for 18 months to two years, a matter of calculating ‘the
balance of risk’.
King is also reported as saying that the real living standards
“will be squeezed a bit more this year” before “almost certainly”
picking up after that.
-London newsroom: 4420 7862 7491; email: ukeditorial@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MSSFX$]
