Sir Mervyn King leaves with a message to the worlds governments
Sir Mervyn King, the Gov of the Bank of England, today insisted that economies across the world were “nowhere near” the position that would be required for them to go back to what would ordinarily be considered “normal” interest rates. The outgoing governor seemed to suggest that central bank’s should not be so rash as to withdraw their monetary stimulus before their respective economies were stable enough to continue growing without it.
In what was to be Sir Mervyn’s last meeting with the Treasury Committee, he truly came out all guns blazing, suggesting that governments had remained idle as quantitative easing was rolled out worldwide and not capitalised on. However, he also said that it wasn’t too late for for governments to make amends for their mistakes.
“They haven’t blown it yet in the sense that there is still time, but they haven’t (taken any action) yet,” said the Bank of England’s governor. He also made comments on the current situation in the United States, where his counterpart, Ben Bernanke, has been the centre of attention in the financial markets of late.
Sir Mervyn said “I think people have rather jumped the gun thinking this means an imminent return to normal levels of interest. It doesn’t, until markets see in place policies to bring about that return to normal economic conditions, there is no prospect of a sustainable recovery and without that prospect for sustainable recovery, markets understand that it will not be sensible to return interest rates to normal levels.”
Sir Mervyn King became the governor of the Bank of England in 2003, taking over the role from Edward George. During his 10 years at the helm he has overseen what many consider to be the worst economic crisis in living memory. This is likely to be his last public appearance before stepping down at the end of this month, making way for the Canadian Mark Carney.