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10 Mar 2014
BoE's Bean: If sterling rises further rate hike will be postponed
FXStreet (Łódź) - Bank of England deputy governor Charlie Bean said on Monday that interest rates would remain on hold for a longer time if the pound continued to strengthen.
"If sterling appreciated, it would potentially reduce inflation because import prices would be weaker ... so we would be more likely to undershoot the inflation target in the medium term, and that would mean we would need to keep policy looser for longer than would otherwise be the case," Bean said.
The BoE lawmaker added that the recovery in the UK could be hindered mainly by problems in the Eurozone or by tensions in emerging markets as well as a bubble forming in the domestic housing market. Only when the recovery is certain will the BoE be able to sell gilts it has bought.
Following Bean's comments the pound sat at 1.6630, close to the day's low of 1.6623.
"If sterling appreciated, it would potentially reduce inflation because import prices would be weaker ... so we would be more likely to undershoot the inflation target in the medium term, and that would mean we would need to keep policy looser for longer than would otherwise be the case," Bean said.
The BoE lawmaker added that the recovery in the UK could be hindered mainly by problems in the Eurozone or by tensions in emerging markets as well as a bubble forming in the domestic housing market. Only when the recovery is certain will the BoE be able to sell gilts it has bought.
Following Bean's comments the pound sat at 1.6630, close to the day's low of 1.6623.