On financial market developments, she argues that the problem is one of uncertainty: about the eventual size of losses from defaults on US sub prime mortgages, and about where these loans have ended up. The impact of the turmoil on UK monetary policy will depend on the answer to three questions: how far the liquidity squeeze will turn into a credit crunch; how well placed households and firms are to weather such an event; and whether there will be a significant impact on credit conditions in the longer term?
Published on
22 November 2007