Bank governor says we can play key role in recovery

Sep 24 2009 By Andrew Hebden, The Journal

Experts wary of a false dawn

DESPITE signs of improvement in the battered UK economy the Bank of England is still wary of a heralding a "false dawn."

The minutes of the Bank’s Monetary Policy Committee (MPC) released yesterday showed members voted unanimously to keep interest rates at their 0.5% record low and continue with its £175bn programme to boost the money supply at its meeting two weeks ago.

Although rising house prices and stock markets gave "promising indications", rate-setters are worried over an "uncertain" recovery.

"The lesson from previous financial crises was that they were not resolved quickly, and that there could be false dawns," minutes of the meeting said.

The Bank said returning confidence could spark a "virtuous upward spiral" for the UK, but warned that the woes of the banking sector could prove a "long-lasting" drag on recovery.

Three members have even called for a bigger rise in the quantitative easing programme.