Did Mervyn King frighten the money markets unduly?
It seems in many ways that whatever Mervyn King, the governor of the Bank of England, cannot win. This week we saw Mervyn King issue a rather downbeat statement on the UK economy and the revelation that he had fought for an increase in the quantitative easing fund by a further £75 billion and not the £50 billion which had been announced. While many analysts respect Mervyn King's opinion on the economy, due to his years of experience, there is a growing feeling that the governor of the bank has possibly frightened the market without warrant.
As we mentioned above, it seems that Mervyn King can do no right in the eyes of many analysts who are sceptical whether he is upbeat or whether he is downbeat. For many people the problem seems to have been the fact that only one month ago he appeared to be very upbeat on the immediate prospects for the UK economy although over the last four weeks he has turned more sceptical. The revelation that he had pushed for more funding for the quantitative easing program is also another consideration which had not been appreciated by many economists.
So what next for the UK economy?
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