Speaking on BBC radio this morning, Bank of England Monetary Policy Committee member Andrew Sentance has underlined the benefits of a weak pound. Mr Sentance says the weaker pound will help offset inflationary pressures, as well as help to redress UK trade imbalances. He also said the pound depreciating will benefit manufacturers in the UK as the economy finds itself in a recession. Certainly doesn’t sound like the Old Lady will be intervening to bolster the pound anytime soon.
Regarding monetary policy, Mr Sentance said the BOE’s forecast of inflation undershooting the 2% target level over the next couple of years gives the Bank more room to cut rates further. He added that the Bank will consider further cuts at its’ December meeting. Sounds like a cut of at least 50bps is a certainty.
