The correction in the credit markets has gone too far, the Bank of England says, in a signal that it believes the worst of the global crisis could be over.

UK Daily View: Credit crunch correction has overshot says Bank of England

Chris Giles analyses the Bank ‘s belief the credit crisis could ease over the next few months.

The bank’s twice-yearly Financial Stability Report, issued on Thursday, says the credit markets “overstate the losses that will ultimately be felt by the financial system and the economy as a whole”. The view represents a big departure from its 2006 and 2007 warnings that risk was underpriced. It added that financial institutions would soon come to see that some assets now “look cheap”.