Mon, Feb 25 2008, 10:52 GMT
http://www.djnewswires.com/eu
BOE's Barker:Recession Outside The Main Possibilities -Report
LONDON -(Dow Jones)- There isn't a strong chance of a recession in the U.K., but the year ahead is likely to be a challenging one, Kate Barker, a member of the Bank of England's Monetary Policy Committee said Monday.
"Recession remains outside the main possibilities," MPC external member Barker said in an interview with the Staffordshire Sentinel during a regional visit.
"We have got this combination of shocks coming from abroad and it's difficult," Barker added. "We certainly expect a period of greater volatility this year."
The BOE reduced interest rates to 5.25% earlier this month, following another 25-basis-point cut in December. But the bank's policy setters face tough decisions ahead - to balance the risk of a sharper-than-expected downturn in growth due to credit tightening, against the upside risk to prices posed by elevated inflation expectations.
While a weakening in sterling should provide support to U.K. exporters, it also means added upward pressure on already strong food and energy price inflation.
The U.K. central bank will have to keep a close eye on economic developments in the U.S. and the euro zone, upon which it relies for a large proportion of its exports.
The credit crunch and the crisis surrounding troubled lender Northern Rock PLC (NRK.LN) are also making it more expensive for U.K. banks to borrow in international capital markets, which provide a major share of their funding.
LONDON -(Dow Jones)- There isn't a strong chance of a recession in the U.K., but the year ahead is likely to be a challenging one, Kate Barker, a member of the Bank of England's Monetary Policy Committee said Monday.
"Recession remains outside the main possibilities," MPC external member Barker said in an interview with the Staffordshire Sentinel during a regional visit.
"We have got this combination of shocks coming from abroad and it's difficult," Barker added. "We certainly expect a period of greater volatility this year."
The BOE reduced interest rates to 5.25% earlier this month, following another 25-basis-point cut in December. But the bank's policy setters face tough decisions ahead - to balance the risk of a sharper-than-expected downturn in growth due to credit tightening, against the upside risk to prices posed by elevated inflation expectations.
While a weakening in sterling should provide support to U.K. exporters, it also means added upward pressure on already strong food and energy price inflation.
The U.K. central bank will have to keep a close eye on economic developments in the U.S. and the euro zone, upon which it relies for a large proportion of its exports.
The credit crunch and the crisis surrounding troubled lender Northern Rock PLC (NRK.LN) are also making it more expensive for U.K. banks to borrow in international capital markets, which provide a major share of their funding.
Tidak ada komentar:
Posting Komentar