Better bank lending 'could see tighter policies'

16 March 2012

Tighter fiscal policy may be required in the UK if bank funding conditions in the country are eased further, a Bank of England (BoE) policymaker believes.

According to Ben Broadbent, the Monetary Policy Committee (MPC) could be in a position to take away financial assistance in the near future on the grounds that consumers and firms are to benefit from an improved credit supply.

Speaking at Market News International in London, Mr Broadbent stated that any abatement in the overseas risks most prevalent in the eurozone would undoubtedly have "favourable effects on the funding costs of British banks".

This would then help the domestic economy through better access to finance, which may then lead to a withdrawal of monetary accommodation by the MPC "even if domestic debt-income ratios remain well above some notional historical norm".

Yesterday (15 March), a poll conducted by Reuters found that economists widely believe the BoE will resist any pressure to hike its asset purchasing budget in the coming months.

By Gary Cooper

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