In explaining what was happening in the economy Mr King said "following a long period of rapid growth there was a need for a slowing of demand to reduce over heating and ease pressure on commodity prices. Inflation will remain high for a while and output growth, at best, weak."
One suspects that given the choice Mr King would not have chosen a credit crunch to achieve the economic slowdown he talks of, but as he points out it is the squeeze on credit and the higher cost of energy and food that are holding back family spending.
Mr King while saying that the Bank of England would not extend the SLS scheme, did point to a new scheme that would help lenders with liquidity in the short term, with three months being suggested as a timeframe, but that more detail would be provided in a document to be published next week.
In a comment telling the financial sector to put its own house in order he said that, "balance sheets of the financial sectors in advanced countries need to contract"