Is the Bank of England Weakening the Pound On Purpose?
All this and more is available on our video blog The FOMC decided to keep interest rates at the current buffer level of 0% – 0.25% as expected yesterday while initiating a elongated halt on its Treasury purchases or quantitative easing in our parlance. There will be no extra cash above the $300bn however the time scale in which these dollars are due to be spent has been extended out until mid October. This can be viewed as a medium term dollar positive as the monetary / fiscal policy landscape is being returned to some semblance of normality. Overnight however the riskier assets of this world have enjoyed themselves as the Fed’s comments of improvements in short term indicators has increased risk seeking trades. In the other piece of central bank news yesterday Mervyn King delivered the Bank of England’s Inflation Report with a much more dovish and laissez faire attitude than most predicted. The recovery in the UK is seen to be much more muted than certainly the chancellor’s prediction
