LONDON: Following are the highlights of remarks made by Bank of England Governor Mervyn King after the central bank published its quarterly inflation report on Wednesday.
KING ON BRIGHTER OUTLOOK
"Today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago, that's the first time I've been able to say that since before the financial crisis.
"But this is no time to be complacent we must press on to ensure a recovery and to bring down unemployment.
"This hasn't been a typical recession and it won't be a typical recovery. Nevertheless, a recovery is in sight."
KING ON MONETARY POLICY
"With inflation still high and spare capacity remaining, monetary policy continues to perform a difficult balancing act. Attempting to return inflation to target too rapidly will result in even slower growth and higher unemployment. That in turn would risk eroding the medium term supply capacity of the economy.
"But by allowing inflation to stay high for too long could cause households and businesses to begin to doubt the MPC's commitment to meeting the inflation target thereby putting at risk medium term price stability.
"Monetary policy alone, however, cannot solve all our problems. There are limits to what can be achieved by general monetary stimulus in any form."
KING ON HOUSING MARKET
"It's fairly clear that one of the factors associated with the weaknesses of the economy is the low level of transactions in the housing market which fell very rapidly in the immediate aftermath of the banking crisis as the source of mortgage credit dried up and that led to a sharp fall in transactions.
"They've recovered a little, but not as much as we might have hoped by this stage.
"I think what is very important is that we don't see this (tax payer guarantees for mortgages) as a permanent feature of the landscape and I don't think anyone, certainly not the chancellor, has suggested that."
KING ON REMIT
"It is sensible for the bank to feel a little more pressure to explain the judgements that we are making when we do make these decisions, which imply short-term trade-offs, and to be more transparent about it."
KING ON INTEREST RATES
"The reason for concern in the future is not the current configuration of interest rates and asset prices. It's that we know that at some point real interest rates have to get back to a healthier and more normal level, positive real interest rates are crucial for the successful operation of a market economy.
"The real challenge is to navigate our way back to that level. Once, when interest rates are back to that level, then you would expect to see some consequences for asset prices, possibly falls in asset prices. And at that point it will be important that people have had time to deleverage."
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