The correction in the credit markets has gone too far, the Bank of England says today, in a signal that it believes the worst of the global crisis could be over. Financial Times
The bank’s twice-yearly Financial Stability Report says the credit markets “overstate the losses that will ultimately be felt by the financial system and the economy as a whole”. The view represents a big departure from its 2006 and 2007 warnings that risk was underpriced. It added that financial institutions would soon come to see that some assets now 'look cheap'.
John Gieve, deputy governor, said: 'While there remain downside risks, the most likely path ahead is that confidence and risk appetite will return gradually in the coming months.'