Publié par : crise2007 | novembre 22, 2007

Worse to come, warns Bank chief

Worse to come, warns Bank chief

By Edmund Conway

Last Updated: 12:55am GMT 21/11/2007

 


 

The Bank of England deputy governor has warned that money markets may be set for an even bigger squeeze before the end of the year, as wholesale borrowing rates soared yet higher.

Sir John Gieve, the Bank’s deputy governor for financial stability, told a hedge fund conference that « there still may be more bad news to come ».

His words echo those of the Governor, Mervyn King, last week, though credit markets have deteriorated dramatically since.

The three-month London interbank offered rate for sterling, known as BBA Libor, rose to a two-month high of 6.49pc, indicating that banks are unwilling or unable to lend to each other.

Sir John said: « There’s still a worry we haven’t yet seen the bottom. Some markets are still very illiquid. As the year end approaches, we may see some tightening in money markets. »

Analysts have pointed to growing evidence that the market is now heading for a second round of major turbulence, as traders react to the news that banks and investors may have to write down $500bn or more in losses connected with the crumbling US housing market.

Lombard Street Research pointed to the latest Bank figures on money growth, which showed the weakest monthly broad money growth for over two years.

Analyst Jamie Dannhauser said: « The possibility of a severe credit squeeze is real and after today’s preliminary money numbers for October it may already be under way. »

He said the figures also suggested that the banks were unable or unwilling to securitise any assets at all last month, as it became all but impossible to sell mortgage debt to investors.

 

source : http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/21/cngieve121.xml

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