The Bank of England and the Debt Management Office should take co-ordinated action to help ease the liquidity crisis, according to New Star's chief economist Simon Ward.
Ward also warned against further cuts to interest rates, which could stoke the fires of inflation, and says the Bank of England has other tools to help the mortgage market. Ward says the Bank has already taken steps to increase the amount of long-term lending it offers, with loans of three months or more rising from 30% last September to around 80% currently. However, he says the Bank could make a major difference by widening its definition of eligible collateral so that it is more in line with the US Federal Reserve and the European Central Bank. Currently, banks can only use AAA-rat...
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