The following are highlights of Bank of England Governor Mervyn King’s remarks at a news conference to present the central bank’s quarterly inflation report.
ON SQUEEZE ON TAKE HOME PAY
“The consequence of that is – unless there are any further adverse movements in world oil, energy and commodity prices, then we would expect that next year real take home pay would start to recover slowly. The extraordinary squeeze on real take home pay that we have seen in the last three years should now begin to come to an end.”
“It is actually rather important that we see whether inflation does come down.
“What’s important is not to see this in any context of fine-tuning, we cannot possibly do that.
“The big picture is that we think inflation will come down sharply, that it will, towards the end of the forecast horizon, perhaps be somewhat more likely than not to be below target.”
ON SHORT PERIOD OF WEAKNESS
“We think we are in for, we hope, what will be a relatively short period of some weakness, in large part because of developments in the euro area and the rest of the world. ”
ON EURO CRISIS AND BANKS
“If there were to be a sharp downturn in the euro area, then our banks would be affected by it.”
“The uncertainty that has been created in the European and world economy by recent events must have, or is likely to have, some potential impact on the pace at which businesses will make investment projects, will they postpone projects, and on the pace of household spending. That is almost impossible to forecast, but it is something that we shall watch very carefully.”
“Everyone understands that these imbalances are serious because the private sector…has since the summer been very clearly unwilling to finance those current account deficits. Someone has to finance them. And this isn’t a liquidity problem, this is a problem about reducing the underlying macroeconomic imbalances.”