MERVE SWERVES BLAME FOR CRISIS
Contributor / 2012-05-09 20:08:10
Mervyn King Governor of the Bank of England has lived up to his nickname as “Merve the Swerve” as he rejected criticism for the financial crisis. He blamed the banks, the system and the decision to de-regulate power from the Bank of England in the past. Mervyn King went on to talk about the challenges facing the banking infrastructure going forward with a need for regulation, resolution and restructure which will be demonstrated next year when the Bank of England’s new financial policy committee will have the power to regulate banks. King supported the idea of ring fencing high street bank operations so they have their own financial cushion to avoid failure and noted the necessity for a framework to allow a bank to fail without being nationalised.
The pound declined against the dollar and measures of U.K. inflation expectations fell to the lowest in four months after a report showed house prices fell and growth in U.K. services slowed more than economists forecast. Sterling was weaker against the euro after the European Central Bank left its benchmark rate unchanged today at 1 percent. A gauge of British services activity in April based on a survey of purchasing managers dropped to 53.3 from 55.3 in March. Ten-year gilt yields touched the lowest in more than two weeks as the U.K. sold inflation-linked bonds.
Sterling weakened as the latest data is consistent with a weak economic outlook, further declines may be limited given sterling is underpinned by haven demand as the euro-region crisis drags on. The pound slipped 0.3 percent to $1.6160 before trading 0.1 percent lower at $1.6194 at 2:04 p.m. London time. The four-day drop is the longest run of declines since November. The British currency rose to $1.6302 on April 30, the highest level since Aug. 31. The pound dropped 0.1 percent to 81.35 pence per euro, after appreciating to 81.13 yesterday, the strongest level since June 2010.
U.K. house prices fell last month as a tax break for first- time buyers ended and the economy entered a double-dip recession, Nationwide Building Society said today. Values slipped 0.2 percent from March, the fourth decline in five months. From a year earlier, prices fell 0.9 percent.
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