Europeans worry a lot more about inflation from falling currencies than the Fed does.
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> On Wed, Nov 12, 2008 at 7:19 AM, Milo wrote:
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- BOE’s King says he has No Desire for ‘Sharp’ Drop in Pound
- BoE Signals Rate Cuts Needed as Economy Contracts
- U.K. Jobless Claims Rise 36,500, Most Since 1992
- Brown signals imminent tax cuts
- British retail sales fall for 1st time since 2005
- U.K. Housing Sales Drop to Record Low as Prices Fall, RICS Says
- U.K. Banks Pared Mortgages 13% After Rate Cut
BOE’s King Says He Has No Desire for ‘Sharp’ Drop in the Pound
The following are comments by BoE policy makers on inflation, economic growth and interest rates. Governor Mervyn King and colleagues made the remarks at a press conference following the central bank’s inflation report.
“Clearly if sterling falls far enough this will be a concern and it will have an impact on inflation. It’s not surprising that it’s fallen in the past year. We started by going into this with a significant trade deficit. We are seeing a rebalancing of the world economy.”
“That can be a helpful part of rebalancing the economy, provided it doesn’t affect our ability to meet the inflation target. It’s something we keep a very careful eye on. We have no wish to see it fall very sharply.”
“We have to accept that some fall back from the level we saw in 2007 is part of the rebalancing. Central bankers are prepared to worry almost every day, and I’m prepared for that.”
Regarding the current value of the pound, the bank’s Chief Economist Charles Bean said:
“That very considerable stimulus from the exchange rate should help to pull the economy out of its slow period.”
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