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Business FX Blog

Adam Solomon is a specialist in business foreign exchange issues at foreign exchange brokers TORfx.

The idea of this column is to assist businesses in saving money on making or receiving payments in foreign currency. It is developed with all companies in mind from public companies with large and complex operations, to smaller companies and individuals.

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Home Forex Check Forex Rate Pound sterling news: Next QE decision in Feb

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Pound sterling news: Next QE decision in Feb PDF Print E-mail
Written by Will Peters   
Tuesday, 17 November 2009 10:14
Sterling traders to wait till February for next major announcement on quantitative easing says top BoE official.


Those looking to the Bank of England for direction on the value of sterling will have to wait until February for the next major decision on qunatitative easing (QE).

Sterling value sees a great deal of volatility emanating from the Bank of England's decision making on interest rates and quantitative easing; and any comments from members of the Monetary Policy Committee (MPC) are keenly followed.

Yesterday saw MPC member Andrew Sentance who said the next major QE decision will come in the February inflation report.

Sentance says Q3 GDP estimate was a shock and may be unreliable, says the UK economy is moving into recovery phase and short-term economic news is very positive and expects UK unemployment may level off at about 2.5mln.

Some analysts have suggested this is a positive view on the UK Economy and as such the chances of increasing QE are diminished - good news for the long run strength of the pound sterling.

Importantly Sentance says the BoE forecasts show danger of inflation in 2 years suggesting rates will certainly be hiked to meet this threat.

In the meantime though Sentance says the sterling's competitive levels are likely to provide additional support to recovery and full impact of rate cuts are only just feeding through and that the impact of QE could take longer.

And in a Bloomberg interview this morning, Sentance said that BOE isn’t yet in a position to consider tightening and BOE MPC “have to be open minded” on Bond plan. He added that UK will feel recession effects for quite long.

The Independent also cites Sentance as saying, QE has not yet improved lending.
Last Updated ( Tuesday, 17 November 2009 10:18 )
 

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