11
Sep
King explains liquidity plan
Bank of England governor Mervyn King has met MPs at Westminster to
explain the thinking behind the monetary policy committee's
approach to interest rates.
Mr King said that at present he expected to have to write another
letter to chancellor of the exchequer Alistair Darling next week
explaining why consumer prices index inflation - currently at 4.4
per cent - is above its three per cent target.
While this may mean no imminent reduction in interest rates to help
cut mortgage costs, Mr King did add that the Bank will publish
proposals next week for a replacement of its special liquidity
scheme, although he said this would not be a long-term
measure.
The special liquidity scheme was set up in April to offer £50
billion in bonds to lenders to help them raise capital, with the
intention that this would gradually free up more funds for mortgage
lending.