BoE's King says monetary policy faces limits

LONDON, Oct 9 (Reuters) - The Bank of England willultimately have to face up to monetary policy's limits as a toolto stimulate the economy, even if there are no technical limitsfor its purchases of government bonds, BoE governor Mervyn Kingsaid on Tuesday.

The central bank could not be "entirely sanguine" about itsability to bring forward future spending indefinitely throughkeeping monetary policy loose, King said at a question andanswer session at the London School of Economics.

"The government is still issuing more debt than we arebuying. So there is no technical limit on the asset purchases,"he said. "I don't think it is an issue about the asset purchasepolicy. I think there is a deeper question about whether thereare limits to what monetary policy as such can do."

King added that it was not clear whether this imposed anyimmediate practical limits on monetary policy, but warned thatit would be hard for there to be global economic growth if mostcountries pursued strategies of export-driven growth.

Explaining the current policy of pumping cash into theeconomy through quantitative easing, King said there was toolittle money in the economy, a phenomenon not seen sinc thegreat depression.

(Reporting by Sven Egenter and David Milliken)


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