ECB: No end in sight to credit crunch

The European Central Bank (ECB) has issued a damning assessment of the current economic climate, warning that the credit crunch is far from over.

Jean-Claude Trichet, head of the Frankfurt-based organisation, said that global economies were witnessing "an ongoing, very significant market correction".

This, he said, would only be compounded if central banks opt to cut interest rates - quashing the hopes of hundreds of thousands of Brits struggling to meet their mortgage repayments.

The prospect of short-term interest rate relief was further dented last week when Bank of England governor Mervyn King predicted that inflationary pressure will worsen in the coming months.

"The credit cycle has turned, commodity prices are rising," Mr Kind asserted. "We are travelling along a bumpy road as the economy rebalances. Monetary policy cannot and should not try to prevent that adjustment."

All told, analysts say current economic indicators are bad news for London property owners, particularly given the government's latest forecast of falling house prices throughout 2008.

News posted on 19th May, 2008