The Bank of England’s Charles Bean believes more economic support from policy makers in complex economies, will make a difference in coming through the recovery. He also believes that leaders around the world were successful in preventing a total financial collapse.
He commented on the next step of the big picture, saying: “Even so, the deleveraging process is incomplete, the recovery remains fragile and a considerable margin of spare capacity is yet to be worked off, while further policy action may yet be necessary to keep the recovery on track.”
Bean’s comments come parallel to the rest of the world, looking quite possibly at a double dip recession happening.
In addition to the above mentioned, the rest of Bean’s speech on Saturday revolved around whether there were fundamental flaws in the framework of existing policies.
He was able to give hard evidence to support the idea that some moments of economic stability could increase activity in the credit markets. He also mentioned monetary policy was not strong enough to moderate credit or asset surges without damaging activity too much.
He commented further on stability, saying: “Instead, with an additional objective of managing credit growth and asset prices in order to avoid financial instability, one really wants another instrument that acts more directly on the source of the problem. That is what macro-prudential policy is all about.”
Bean and others mentioned also: “There is a risk … that even a modest increase in the target of a few percentage points could lead to a corresponding increase in inflation volatility and associated welfare losses.”