BoE governor backs low interest rates

I don't know whether Mervyn King is a fan of Edith Piaf. But where monetary policy is concerned, we can say he is not a man burdened by regrets. In a nutshell, the governor of Britain's central bank had this to say last night in Newcastle about Britain's above target inflation and the Bank's response to it.

Inflation is expected to run well above the Bank of England target rate of 2% for another two years in the UK. Don't worry it's a self-inflicted goal. Moreover, Inflation is a cause for optimism says Bank of England governor Mervyn King. The UK inflation rate will remain stubbornly high for longer than previously thought, the governor of the Bank of England has said.

The Bank of England's Financial Policy Committee (BoEFPC) warns there is "evidence of the re-emergence of... behavior in financial markets not seen since before the financial crisis," citing the increased issuance of synthetic products and added that banks have "little margin for error against a backdrop of low growth in the advanced economies," despite what we are told about their 'fortress balance sheets.

On Wednesday, after the Governor of Bank of England Mervyn King announced the quantative easing of additional £25 billion, the pound dropped versus the dollar and the euro, reported Financial Times. The news came as a shock to investors, which did not expect Mr King’s move.