LONDON: Bank of England Deputy Governor Paul Tucker said on Monday the British economy was not yet ready to cope with tighter monetary policy. Tucker said the recovery would be “bumpy and “uneven” because of “reasonably strong” headwinds, despite a strong rebound from an 18-month recession at the start of this year. He said it was the BoE's mandate to make sure that Britain avoided a double-dip recession which some analysts fear because of severe government spending cuts, strained credit conditions and wider risks to the global economic recovery. “Earlier in the year, I had expected - half expected perhaps - that by this time in the year the Bank of England would start to withdraw the monetary stimulus we had provided to the economy,” Tucker told business leaders in London. “That seems to me, in terms of my own personal vote, rather less likely now than it was.” The BoE has slashed interest rates to a record low of 0.5 percent and spent 200 billion pounds ($315 billion) of newly created cash on buying assets to boost growth. One member of the Monetary Policy Committee has called for higher interest rates to counter stubborn inflationary pressures, while another wants an expansion of quantitative easing to support growth as the government cuts spending by about 80 billion pounds over four years. There are signs that other members of the committee are leaning to a more dovish stance, although analysts do not expect any sudden policy move. Tucker said that, while the UK economy appeared to be rebalancing towards manufacturing away from services-led growth, there was still work to be done to mend imbalances in the global economy. He also said credit conditions were “still too tight” but policymakers would ensure that new banking regulations were not enforced at a pace that might do harm. “We will not push the banking sector into strengthening their balance sheets at such a pace that jeopardizes recovery,” he said. Asked if he thought the government's spending cuts would push Britain back into recession next year or the year after, Tucker said: “It's in our mandate to ensure it doesn't.” The Conservative-led coalition government has said the BoE could provide more support to the economy to cushion the blow from its austerity measures if needed.
