LONDON, Nov 12 - Following are highlights of a press conference by Bank of England Governor Mervyn King following the release of the Bank's latest quarterly Inflation Report:
Says "I am not going to try and predict where interest rates will go." Says revisions to national accounts helped solve some problems in the MPC's interpretation of the data. Says survey information had not sqared with the official data. "But some of the statistical fog has now dissipated." Says China contributing to falls in the prices of internationally traded goods. "But I don't think it is sensible to pin it all on China." Says MPC takes this into account when making its forecasts. King says MPC feels likely numbers of people who might experience negative equity much smaller than in the early 1990s. "There is no indication that the scale of debt problems have actually risen markedly in the last five years." "We can draw real comfort from that."
King says BoE does not need any other instrument apart from interest rates to fulfill its function. Says monetary policy gives MPC all the flexibility it needs to respond to short-term changes in the economy. Says it important that fiscal rules are met and that the underlying position is transparent. But does not see any utility in using fiscal policy for "fine tuning" the economy. King says it is hard to believe the margin of spare capacity in the UK economy is that large. King says rate rise was not due only to housing market and consumer debt. Repeats that MPC keeps an open mind each month about what needs to be done with interest rates. Has no pre-conceived path for rates. "I don't know if last week's rate rise was enough. The Committee will look at it at each meeting as we come to it." "The Committe does not intend to set out privately or publicly charting a path where interest rates will have to go." "We will keep an open mind each month as to what to do with interest rates." Says U.S. recovery has been very rapid but is likely to slow down. "Our view of world economy has not changed very much since August." Says key difference between UK and U.S. is that the UK suffered far less of a slowdown in the past two years. King says MPC needs to know more about the distribution of consumer debt. Says "everyone need to think carefully" about the level of debt they can afford. Says the outlook for export markets marginally softer than in August. Adds that some of the recent "statistical fog" has lifted. "Overall the outlook is somewhat stronger than in August." Says there are considerable risks to the inflation forecasts but they are "broadly balanced." King says house prices have risen faster than the MPC had expected in August.//