LONDON (MNI) – The likelihood of low growth over the next year has
increased, Bank of England Deputy Governor Charles Bean says.
In a question and answer session following a speech to the Council
of Mortgage Lenders Bean was asked about the chance of another
recession. He said the BOE would update its forecasts in its November
Inflation Report, but acknowledged the growth outlook had deteriorated.
Bean said the probability of low growth outcomes over next year or
so was materially higher now than back in the early part of this year.
He was asked about any changes in the government’s fiscal plans,
but simply said this was something the BOE would factor into its
forecasts and that it would respond appropriately.
He was also asked about the impact of quantitative easing on
pension plans.
He said it was true QE has particular effects relevant to pension
funds and that, like all monetary policy, it has distributional effects.
On bank capital, Bean said it made sense for banks to add a little
to their capital buffers now, if they have the opportunity, rather than
handing out extra earnings as dividends or bonuses.
The purpose of buffer is to be run down in bad times. but are times
as bad as they’re going to get or could they get worse ? Bean said.
Bean said the BOE’s view is that it could get worse in which case
those buffers are useful to rely on but if banks’ view is that it’ll get
better then their perception of the buffer changes.
–London newsroom: 4420 7862 7491; email: sanjukta.moorthy@ntkn.com
drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$]
