LONDON (MNI) – Solving global trade imbalances will require
international agreement on a common path of adjustment, Bank of England
Chief Economist Spencer Dale writes.
In a forward to the Bank of England’s latest Quarterly Bulletin,
Dale says that changes to exchange rates are also needed to reduce
imbalances.
“Agreement on a common path of adjustment will be necessary, and
this should be informed by countries’ ability to follow that path in a
sustainable way. Many policies, including changes to exchange rates,
will be needed to reduce these imbalances,” Dale wrote.
Dale’s concerns about global imbalances follow a Mervyn King speech
on that very same issue at the Stanford Institute for Economic Policy
Research on March 11.
“Today, the most obvious problem at the global level is that the
imbalances are growing again. And continuing high debt levels … leave
indebted countries particularly vulnerable to a rapid reversal of high
saving rates in surplus countries and a rise in long-term interest rates
– surely inevitable in the long run – which would drive down asset
prices,” King said.
Dale also said that he expects the UK recovery to continue and
noted that financial market uncertainty had increased as a result
of political turmoil in the Middle East and North Africa.
“More recently, uncertainty in financial markets increased in
response to the emergence of political tensions in a number of countries
in North Africa and the Middle East,” Dale said.
–London newsroom: 4420 7862 7492; email: ukeditorial@marketnews.com
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