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Governor Highlights "global Rate Risk To Uk"

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Main story in todays business section:

However, he said that whatever was at the root of the development, a potential correction in world markets could destabilise the British economy, with the risk of some combination of steep falls in asset prices, shifts in exchange rates, or a sharp rise in inflation.


Outlining the possible causes of the drop in long-term interest rates, Mr King echoed the Bank’s earlier warnings of a global “search for yield”, as low official short-term rates around the world have led to rapid growth of liquidity and led investors to seek out riskier assets in a quest for higher returns. In turn, he said that this had triggered jumps in asset prices of all kinds, from property to equities and bonds.

Raising the spectre of a slump in asset values, Mr King said that investors had been encouraged to take on more risk for less return, but “it (was) questionable whether such behaviour can persist”. At some point, either asset prices could suffer a drop, or a correction could come about through a burst of inflation. Both would make the Bank’s mission harder, he added.



As Charlie has said on another thread, the storm clouds are slowly gathering above.

Mervyn knows the writing is on the wall, hence his speeches over the last few years - a vain attempt at getting the blame off him.

Edited by BubbleTurbo

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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