In contrast to Bernanke's foolish comment "risk of substantial downturn has faded" (see Things That Have Not Yet Happened) the Bank of England sees things differently.



Please consider Bank of England warns that credit crisis far from over as banks hoard cash.



Conditions in the money markets remain "stressed", with banks reluctant to lend to each other for longer than a month, the Bank of England has said.



In a further sign that recovery from the financial crisis is still at a very early stage, the Bank used its quarterly examination of the markets to warn that many areas are almost frozen, as banks continue to repair their balance sheets.

My Comment

It comes after Bank Governor Mervyn King warned that the crisis is not over, and amid fears that central banks around the world are preparing to raise their interest rates.

My Comment

Indeed, interbank borrowing rates have remained high in recent months, despite the Bank's Special Liquidity Scheme to pump extra cash into the markets.



Concerns about tight credit have in some quarters been replaced by worries about the soaring price of oil, which recently peaked at just below $140 a barrel. The Bulletin acknowledged that the activities of hedge funds and other investors may have pushed it a little higher, saying: "Speculative activity was not widely thought by contacts to have been the primary cause of upward price pressures in energy markets, although it is possible that it played some role in the short run."

My Comment

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