BOE Governor King has told the parliamentary committee that the Bank is looking at reducing the renumeration of bank reserves with the Old Lady. King opined that the Bank doesn’t want bank reserves to be unnecessarily high.
The aim as King says would be to make “banks work a little bit harder to try indivdually to convert some of those reserves into other assets.” The BOE basically wants to encourage commercial banks to put some of their reserves to work i.e lend them to the cash starved public.
Comment sees sterling slump. Cable down testing support at 1.6500/05.
(Cable has posted a session low 1.6493. Little surprised cable has reacted quite so violently to this news.)
