26-03-2008
Bank of England governor issues credit crunch warning
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The current governor of the Bank of England, Mervyn King, has issued a warning in relation to the ongoing crunch on credit.
Mr King, in a meeting before the Treasury select committee, confirmed that current market difficulties are impacting upon the UK's economy more significantly than previously expected. Last week, Mr King had a separate meeting with a number of bank chief executives, including those from Lloyds TSB and the Royal Bank of Scotland.
"Across the world, confidence in financial markets is fragile. It is not that banks, at least in the UK, have made loans that are likely to result in unsustainable losses," said Mr King, in a report by the BBC. "The heart of the problem is not in the real economy.
It is in the financial sector itself." Mr King met with committee MPs in order to discuss the Bank of England's most recent report on inflation. Data released by the Bank of England shows inflation levels to be currently at a rate of 2.5 per cent.