BoE's King says limits to further stimulus of economy

LONDON Wed Feb 13, 2013 6:08am EST

LONDON Feb 13 (Reuters) - Bank of England Governor Mervyn King said on Wednesday there were limits to what further stimulus of the economy could achieve.

King, speaking to reporters after the central bank published its quarterly inflation report, said the Bank of England remained ready to do more to help the economy if needed.

"We must recognise, however, that there are limits to what can be achieved via general monetary stimulus - in any form - on its own," King said, adding that incentives to spend now reduced spending plans of households and businesses in the future.

The Bank of England has spent 375 billion pounds on buying government bonds but has held off from increasing the programme.

British governnment debt prices fell after King's comments.

King also told reporters that the Bank of England should not risk tightening monetary policy, even as it pushed back its expectations for when inflation would return to its target to early 2016, because the economy remained weak.

"Attempting to bring inflation back to target sooner would risk derailing the recovery and undershooting the target in the medium term," he said.

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