WASHINGTON (Reuters) - Monetary policy cannot do all the work of stimulating economic recovery, Bank of England head Mervyn King said on Tuesday.
“There are limits on the ability of monetary policy to stimulate demand,” King told a conference sponsored by the International Monetary Fund.
King also said the economy would not rebound firmly as long as banks have too little capital.
The Bank decided not to pump fresh money into its stagnant economy earlier this month, despite a new remit that gives it more leeway to disregard above-target inflation.
Reporting by Pedro da Costa and Jason Lange