The Bank of England’s Bean says the worst is likely behind the UK economy with the worst risks unlikely to crystallize (presumably the collapse of the banking system). As the recovery proceeds, the MPC will gradually need to remove monetary stimulus of face a rise in inflation. He would like to see a further expansion in credit.
The markets are seeing a wave of profit-taking with EUR/GBP leading the way. Traders sense a bit of hawkishness in Beans comments. They are in contrast to Posen’s cautious comments on banks.
EUR/USD has dipped to the high 1.4820s while EUR/GBP has fallen back to 0.9382.
