RTTNews - Tuesday, Paul Tucker, a member of the Bank of England's Monetary Policy Committee said the medium-term outlook for the British economy remains highly uncertain, while the near-term indicators improved a bit.
At the Association of British Insurers 2009 Biennial Conference, Tucker said at this stage, it is unclear whether the financial system can generate the expansion of credit that is required to support recovery. The reopening of high-grade bond markets has definitely been encouraging, he added. But bank lending remained subdued in most nations including U.K, he said.
Tucker warned about the risks from banks simultaneously deleveraging by reducing credit availability. He pointed out that not lending would be a counterproductive business and financial strategy.
The MPC would tighten monetary conditions in the due course that is warranted by the medium term outlook for inflation, the policymaker said.
Tucker, who is also the Deputy Governor for Financial Stability stated that The financial community must also be open to more trading in core, vanilla markets going via exchanges or other well-designed and open trading platforms. He added that policymakers would like to see serious consideration of whether the corporate bond markets could benefit through something along those lines.
He welcomed the initiative of the insurance industry to release a code of conduct for trade-credit insurance.
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