• Deputy governor Charles Bean says base rate must not rise too soon
• US treasury secretary Tim Geithner warns of challenges ahead on road to recovery

The deputy governor of the Bank of England pledged tonight to remove Britain’s emergency economic policy boost slowly after a warning from the US treasury secretary, Tim Geithner, that the global economy was still at risk of a double-dip downturn.

Charles Bean, one of two deputies at Threadneedle Street, said a time would come when the Bank’s monetary policy committee would need to push up interest rates from 0.5% and reverse the programme of quantitative easing, which boosts the cash available for lenders.

“But we don’t want to do it too early and nip the recovery in the bud,” Bean said, speaking in Yorkshire as part of a nationwide tour to explain the Bank’s approach to monetary policy.

The deputy governor expressed optimism that the economy would be on the mend by early next year – sentiments echoed by the chancellor, Alistair Darling, and Geithner, after a meeting in London today today to discuss the next steps in fighting the two-year global crisis.

Geithner expressed confidence that President Obama’s $800bn (£500bn) stimulus package would boost recovery prospects in the second half of this year.

“We have a very powerful set of policies in place, coming on stream,” he said. “I think there is a very good chance we will see the US economy and the world economy get back to recovery, get growing again, over the next few quarters.”

Darling said: “In this country we are coming through the severest downturn in 60 years. The measures we have taken are having an effect. I am confident growth will return at the turn of the year.”

Geithner said measures adopted so far had helped provide a base for recovery: “Policy has been effective in arresting and mitigating the force of the storm.”

The US treasury secretary was speaking after meetings with Gordon Brown, Darling, Mervyn King, the governor of the Bank of England, and Lord Turner, the chairman of the Financial Services Authority, to discuss the agenda for the G20 summit in Pittsburgh in September.

Asked whether there was a possibility of a double-dip recession, Geithner added: “In my view there are still significant risks and challenges ahead.”

He said that reform of the financial sector had to ensure that institutions took a more conservative approach to risk-taking; that the regulatory framework was broadened to include sectors currently unregulated; and that consumers and investors were protected against “manipulation and fraud”.

Despite what Geithner called a “remarkably strong consensus” on elements of a reform package, the Pittsburgh summit is likely to outline broad principles rather than introduce specific new measures to tighten up regulation and supervision.

A report published by the British Retail Consortium (BRC), showing that spending in shops rose 1.4% on a like-for-like basis in the year to June, will come as welcome news to the chancellor.

“June’s sunshine gave overall sales a much-needed boost,” said Stephen Robertson, director general of the BRC. “The heatwave helped food retailers and got customers buying outdoor goods, such as garden furniture, pools and picnic ware.

“Clothing clearance sales coincided nicely with the upsurge in demand for summer wear. But the sun knocked sales of furniture and homewares, as people focused on the outdoors. Given the uncertainty about jobs, customers are still nervous about spending on non-essentials.”