Causes of debt crisis unresolved: BoE chief

The Band of England (BoE) governor acknowledged on Tuesday that the bank’s resumption of its asset buying programme will not automatically persuade commercial banks to increase lending, though it should help to ease the funding pressures faced by banks.“I can’t guarantee that it means that bank lending will rise, but what I do believe is that it won’t fall as far as it might otherwise have done,” King said. “It certainly doesn’t guarantee that lending to the real economy is positive,” he added.The UK economy has barely grown since last September, and BoE policymaker Martin Weale warned that GDP may even shrink in the final months of 2011.King said in Tuesday’s hearing that the Monetary Policy Committee had already been close to voting for more easing in September, but held back to see if markets would recover from their slump suffered over the summer. When market volatility did not dampen down, the Bank launched quantitative easing despite the “uncomfortable level of inflation, which hit a three-year high of 5.2 percent in September.However, King rejected claims that the Banks failure to control inflation was the reason for the squeeze on Britons living standards, saying inflation was only a symptom.