Bond yields fell after the remarks, which came less than a week after the Bank of England paused its 200 billion pound ($314 billion) asset-purchase program. The bank today also cut its forecast for economic growth. Inflation will peak at about 3.3 percent before slowing as low as 0.9 percent and staying below the goal of 2 percent, the forecasts showed.
“It is far too soon to conclude that no more purchases will be needed,” King told reporters in London at the Bank of England’s quarterly press conference. “The Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”
Policy makers are weighing the risk of an economic relapse against the danger that too much money in the economy will fuel inflation. While the U.K. emerged from the worst recession since World War II in the fourth quarter, growing 0.1 percent, former policy maker Charles Goodhart said in an interview today there’s a “great fear” that it contracted again at the start of 2010.
The Bank of England’s forecasts show annual gross domestic product growth will reach about 3.2 percent in the second quarter of 2011, compared with about 4 percent previously.
“Spare capacity will press down on inflation in the medium term,” King said. “It is more likely than not that inflation will be below the target for much of the forecast period, but the risks are broadly balanced by the end.”
Bond Yields
The yield on the benchmark two-year government bond fell 14 basis points to 1.112 percent after King’s comments. The pound slipped as much as 0.5 percent to $1.5677.
Pre-election uncertainty on the prospects for the budget deficit clouds the Bank of England’s forecasts at a time when investor concern on European sovereign debt is gripping financial markets.
Prime Minister Gordon Brown has said the biggest mistake Britain could make would be to withdraw economic stimulus measures too early. The recession, which lasted for six consecutive quarters, shaved 6 percent off gross domestic product. The economy shrank 4.8 percent in 2009, the biggest annual drop since records began in 1949.Bond yields fell after the remarks, which came less than a week after the Bank of England paused its 200 billion pound ($314 billion) asset-purchase program. The bank today also cut its forecast for economic growth. Inflation will peak at about 3.3 percent before slowing as low as 0.9 percent and staying below the goal of 2 percent, the forecasts showed.
“It is far too soon to conclude that no more purchases will be needed,” King told reporters in London at the Bank of England’s quarterly press conference. “The Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”
Policy makers are weighing the risk of an economic relapse against the danger that too much money in the economy will fuel inflation. While the U.K. emerged from the worst recession since World War II in the fourth quarter, growing 0.1 percent, former policy maker Charles Goodhart said in an interview today there’s a “great fear” that it contracted again at the start of 2010.
The Bank of England’s forecasts show annual gross domestic product growth will reach about 3.2 percent in the second quarter of 2011, compared with about 4 percent previously.
“Spare capacity will press down on inflation in the medium term,” King said. “It is more likely than not that inflation will be below the target for much of the forecast period, but the risks are broadly balanced by the end.”
Bond Yields
The yield on the benchmark two-year government bond fell 14 basis points to 1.112 percent after King’s comments. The pound slipped as much as 0.5 percent to $1.5677.
Pre-election uncertainty on the prospects for the budget deficit clouds the Bank of England’s forecasts at a time when investor concern on European sovereign debt is gripping financial markets.
Prime Minister Gordon Brown has said the biggest mistake Britain could make would be to withdraw economic stimulus measures too early. The recession, which lasted for six consecutive quarters, shaved 6 percent off gross domestic product. The economy shrank 4.8 percent in 2009, the biggest annual drop since records began in 1949.
“It is far too soon to conclude that no more purchases will be needed,” King told reporters in London at the Bank of England’s quarterly press conference. “The Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”
Policy makers are weighing the risk of an economic relapse against the danger that too much money in the economy will fuel inflation. While the U.K. emerged from the worst recession since World War II in the fourth quarter, growing 0.1 percent, former policy maker Charles Goodhart said in an interview today there’s a “great fear” that it contracted again at the start of 2010.
The Bank of England’s forecasts show annual gross domestic product growth will reach about 3.2 percent in the second quarter of 2011, compared with about 4 percent previously.
“Spare capacity will press down on inflation in the medium term,” King said. “It is more likely than not that inflation will be below the target for much of the forecast period, but the risks are broadly balanced by the end.”
Bond Yields
The yield on the benchmark two-year government bond fell 14 basis points to 1.112 percent after King’s comments. The pound slipped as much as 0.5 percent to $1.5677.
Pre-election uncertainty on the prospects for the budget deficit clouds the Bank of England’s forecasts at a time when investor concern on European sovereign debt is gripping financial markets.
Prime Minister Gordon Brown has said the biggest mistake Britain could make would be to withdraw economic stimulus measures too early. The recession, which lasted for six consecutive quarters, shaved 6 percent off gross domestic product. The economy shrank 4.8 percent in 2009, the biggest annual drop since records began in 1949.Bond yields fell after the remarks, which came less than a week after the Bank of England paused its 200 billion pound ($314 billion) asset-purchase program. The bank today also cut its forecast for economic growth. Inflation will peak at about 3.3 percent before slowing as low as 0.9 percent and staying below the goal of 2 percent, the forecasts showed.
“It is far too soon to conclude that no more purchases will be needed,” King told reporters in London at the Bank of England’s quarterly press conference. “The Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”
Policy makers are weighing the risk of an economic relapse against the danger that too much money in the economy will fuel inflation. While the U.K. emerged from the worst recession since World War II in the fourth quarter, growing 0.1 percent, former policy maker Charles Goodhart said in an interview today there’s a “great fear” that it contracted again at the start of 2010.
The Bank of England’s forecasts show annual gross domestic product growth will reach about 3.2 percent in the second quarter of 2011, compared with about 4 percent previously.
“Spare capacity will press down on inflation in the medium term,” King said. “It is more likely than not that inflation will be below the target for much of the forecast period, but the risks are broadly balanced by the end.”
Bond Yields
The yield on the benchmark two-year government bond fell 14 basis points to 1.112 percent after King’s comments. The pound slipped as much as 0.5 percent to $1.5677.
Pre-election uncertainty on the prospects for the budget deficit clouds the Bank of England’s forecasts at a time when investor concern on European sovereign debt is gripping financial markets.
Prime Minister Gordon Brown has said the biggest mistake Britain could make would be to withdraw economic stimulus measures too early. The recession, which lasted for six consecutive quarters, shaved 6 percent off gross domestic product. The economy shrank 4.8 percent in 2009, the biggest annual drop since records began in 1949.
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