Monetary policy committee member Adam Posen has thrown a spanner in the works this morning after the Pound strengthened across the board yesterday by saying Britain’s fledgling economic recovery is not fuelling a surge in inflation and justifies additional quantitative easing.
“If there was going to be a recovery that either was inflationary or otherwise meaningfully different from that established pattern, it should have been evident by now,” Posen told the Irish News.
“We’ve fended off a financial crisis, currency and interest rates are stable and there is price stability because, while we overshot a bit on our inflation target, let’s be realistic, 3.5 percent is a far cry from double-digit inflation.”
Posen, who was the sole voice on the nine-strong Monetary Policy Committee calling for a 50 billion pound expansion of the BoE’s quantitative easing scheme this month, also said the financial sector was not “fixed yet”.
GDP growth in the UK grew twice as fast as predicted last quarter this combined with ratings agency Standard & Poor’s raising their outlook on the UK economy along with praising the government’s cost cutting efforts helped to push the pound off a 7 month low against the Euro and allowed the beleaguered currency to rise against all of the 17 most actively traded currencies.
The momentum has slowed right down this morning after Posen’s comments although sterling has still managed a good rise against the Australian Dollar during Asian trade.