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King not a fan of doing it the American way

After a period of relative inactivity on the media front, the governor of the Bank of England Mervyn King has been very active in his opposition to a tax payer funded scheme, similar to the in the US, to bail out the mortgage market. He believes that there needs to be some pain in the banking sector in order to get the UK financial sector back into shape for the future and constant bail outs are only short term gimmicks.

In a rather open debate compared to Mr King's recent ventures into the media he also suggested that the second half of the current decade had been blighted by over ambitious budget projections and the constant deterioration of the underlying fiscal backbone of the UK. In affect he has made a veiled criticism of the Treasury and in many ways Gordon Brown's tenure in office.

On the subject of inflation Mr King was keen to confirm his expectations that the rate will still rise to over 5% in the short term, even though the price of oil has fallen of late. However, he does expect the fall in the price of oil to kick in fairly soon and bring the rate down although he was very coy on future forecasts for inflation.

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