Sir Mervyn King warns there is still some way to go before economy recovers as Bank predicts growth will flatline this year.
The Bank of England‘s governor Sir Mervyn King hinted at further action to boost the ailing UK economy on Wednesday after the Bank slashed its 2012 growth forecast to zero and said inflation was under control.
King said there was no urgent need for fresh stimulus, but signalled more money creation through the Bank’s quantitative easing (QE) programme in response to an economic performance that has “continually disappointed expectations of a recovery”.
Against a backdrop of a worsening crisis in the eurozone and tighter lending conditions imposed by UK banks, the Bank’s quarterly inflation report cut its growth forecast for 2012 from the 1.25% pencilled in three months ago and believes the bounce-back next year will be weaker than previously anticipated.
King said: “The overall outlook for growth is weaker than in May, reflecting downside news in the near term and, in the medium term, the possibility that the weakness in output and productivity growth that we have seen since the financial crisis persists.