Filed Under:
Forex pairs in this Article » EUR/USD, GBP/USD (London) - Paul Tucker has followed his Bank of England Monetary Policy Committee colleagues today by stressing that the recovery in the UK economy is not yet strong enough to withstand tightening monetary policy.

Speaking at the annual conference of the Association for Financial Markets in Europe (AFME),Tucker drew attention to the substantial degree of uncertainty about the “amount of slack in the economy currently and prospectively”

Tucker also defended the BoE’s use of guidance, particularly during a period when the recovery is beginning to take hold: “Saying more about the Committee's approach to policy in this way might be particularly valuable during a period when signs of recovery have become more apparent. These are conditions in which it would be very easy for the financial markets, businesses and households to jump to the mistaken conclusion that monetary stimulus will soon begin to be withdrawn. Given the slack in the economy, the Committee is not in a rush.”

Tucker concluded by emphasising the need for the MPC to avoid misperceptions about the likely course of policy: “But by adopting a probing approach and maintaining an eclectic approach to its assessment of the outlook, the MPC has the wherewithal to provide broadly the right degree of stimulus without risking, or diluting its commitment to, price stability."

Sterling has been under attack all day as one MPC member after another has seemingly lined up to highlight the fragility of any UK recovery.

It is currently trading at USD1.5965, recovering from session lows at USD1.5955. GBP/USD has so far lost 0.48 percent on the day.
comments powered by Disqus