Emergency cut ‘essential’, says MPC
Responding to Mervyn King’s Treasury Select Committee address on Thursday, fellow MPC member Blanchflower issued a stark warning that immediate action was needed in order to inject a degree of stability into an increasingly unsteady British economy.
Blanchflower said rates needed to “come down now so that we get ahead of the curve,” as fresh statistics have shown house prices continuing to slump.
Calling the economic outlook “rather uncomfortable”, King said that the BoE would be pumping a “substantial amount of money” into the credit markets to guard the banks against falling short during the Christmas period.
King said that growth will eventually return to its long-run average and inflation to its target of 2 per cent, but this will only happen once a degree of stability returns to the market, something that seems to become increasingly elusive as we look to the current volatility experienced within the markets.