BOE estimates that the UK economy is set for a decline of about 3.9% in 2009 and about 1% in 2010.
Mervyn King, Governor, BOE, said: “There are pretty solid reasons for supposing that there will be a recovery next year, but also pretty solid reasons for questioning if that will be sustained. But in the light of the state of balance sheets particularly in the financial sector, the committee judges that the risks are weighted towards a relatively slow and protracted recovery.
The Bank predicts that inflation should fall to around 0.5% by the end of 2009 before heading north to about 1.2% in two years’ time – below its target rate of 2% – as quoted in bbc.co.uk.
Mr. King said that it is too early to arrive at a conclusion whether BOE’s quantitative easing policy was successful in bailing out the banking sector or not. However, he added that he is not dissatisfied with its effects.
Mentioning that the banking sector worries are not yet fully eased and the timing and strength of the recovery as highly doubtful, he further added that the government intends to stimulate the economy and the weak pound would help the cause.
Mentioning that the banking sector worries are not yet fully eased and the timing and strength of the recovery as highly doubtful, he further added that the government intends to stimulate the economy and the weak pound would help the cause.
