The Bank of England (BoE) said on Thursday it would inject ?10 billion (US$20.6 billion) into money markets amid the ongoing credit crunch sparked by the US subprime loan crisis.
The move comes as British central bank Governor Mervyn King warned there was a risk of a more substantial credit squeeze in the coming months.
The US subprime loan crisis was sparked by a growing number of Americans with patchy credit histories failing to meet payments on their mortgages.
That in turn led to a global credit tightening as commercial banks turned cautious about lending money to each another.
The BoE said in a statement on Thursday that the extra funds would be provided "in order to alleviate concerns that money market conditions will be particularly tight over the year-end and to provide greater assurance to banks in managing their liquidity positions over the period."
The money would be injected on Dec. 6 and become repayable within five weeks, rather than the usual seven days, the central bank said.
It would be offered at the bank's key interest rate of 5.75 percent.
British Chancellor of the Exchequer Alistair Darling, speaking in parliament on Thursday, said the BoE announcement was "the right thing to do."
Earlier on Thursday, King told British lawmakers at a parliamentary hearing that there could be worse to come following the recent turmoil on world financial markets.
"Despite the accumulation of significant amounts of liquidity by many of the larger banks, markets are fearful that further falls in asset prices might impair the balance sheets of many banks," King said.
"Although that fear has so far run well ahead of realized losses, it has the potential to lead to a further tightening in credit conditions," he said.
King also predicted that a period of uncertainty lay ahead for the British economy given wider global problems stemming from the US subprime housing crisis.
"The outlook is ... highly uncertain, which makes the task of navigating through the next few months far from straightforward," King told the Treasury Select Committee.
Earlier this year, Darling forecast that the economy would grow at a slower-than-expected rate next year because of the fallout from the global credit squeeze.
Darling had said growth would likely come to 2.0 percent to 2.5 percent next year -- a downgrade from a forecast of 2.5 percent to 3.0 percent.
King said on Thursday: "Recent economic news has been dominated by the continuing turmoil in global financial markets which has led to a tightening of credit conditions, particularly for the most risky borrowers.
"In the UK, the consequences are difficult to assess and are likely to be evident first in the housing and commercial property markets," he said.
"At the same time, world energy and food prices have risen sharply, and the latest data on earnings growth look somewhat less benign than before so the short-term outlook is rather uncomfortable," he said.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
THUGGISH BEHAVIOR: Encouraging people to report independence supporters is another intimidation tactic that threatens cross-strait peace, the state department said China setting up an online system for reporting “Taiwanese independence” advocates is an “irresponsible and reprehensible” act, a US government spokesperson said on Friday. “China’s call for private individuals to report on alleged ‘persecution or suppression’ by supposed ‘Taiwan independence henchmen and accomplices’ is irresponsible and reprehensible,” an unnamed US Department of State spokesperson told the Central News Agency in an e-mail. The move is part of Beijing’s “intimidation campaign” against Taiwan and its supporters, and is “threatening free speech around the world, destabilizing the Indo-Pacific region, and deliberately eroding the cross-strait status quo,” the spokesperson said. The Chinese Communist Party’s “threats
RSS