BoE's [Pounds Sterling]10bn U-Turn on Funding Banks; Sterling Effort: The Bank of England Is Planning to Plough Billions into the Financial Markets
Byline: Sam Fleming
THE Bank of England's attempts to restore order to financial marketstook a dramatic twist as it offered to pump tens of billions of pounds intomarkets on significantly more generous terms.
In a major volte-face, the BoE said it will lend beleaguered banks [pounds sterling]10bn nextweek, followed by three further weekly injections of cash.
The move comes after weeks of lobbying from banking bosses, who met GovernorMervyn King on Tuesday night to plead for more generous credit.
The BoE last night denied its move was also a result of pressure from PrimeMinister Gordon Brown.
But the Old Lady is expected to launch a review of dealings with the marketsamid fears it has lost touch with the City.
'The whole thing has been badly handled - there are a lot of reputations on theline,' said economist Ian Kernohan of Royal London Asset Management.
'A lot of what they are doing now they ought to have done weeks ago; it's acase of acting after the event.' King will appear before the Treasury SelectCommittee today to defend his handling of the financial crisis.
As he lectured the City on the dangers of 'moral hazard' over the past month,the Federal Reserve and the European Central Bank were injecting hundreds ofbillions into markets.
On Tuesday the Fed went a step further, slashing its main interest rate by halfa point and sparking a rally on global markets. …