The Pound has edged higher against the Euro after Bank of England Governor Mark Carney said that the Central Bank is ready to add stimulus to the UK economy if investor expectations for interest rate rises threaten the UK recovery.
Earlier in the month Carney introduced forward guidance measures and announced policy maker plans to keep interest rates at the record low level of 0.5% for the next three years. Expectations of a tapering to the US Federal Reserve’s monetary easing programme and further UK economic growth have prompted investors to raise their bets that a rate hike will occur sooner or later.
Carney said in his speech to business leaders in Nottingham; “The upward move in market expectations of where bank rates will head in the future could, at the margin, feed into effective financial conditions facing the real economy, if they tighten, and the recovery seems to be falling short of the strong growth we need, we will consider carefully whether, and how best, to stimulate the recovery further.
‘Our forward guidance was clear that, although we would not reduce the stimulus until the recovery is secure, we would if necessary provide more. We are focused on doing what we can to reduce uncertainty and build resilience so that the recovery can be sustained despite the inevitable shocks ahead.”
The BOE reaffirmed its plans to keep interest rates unchanged until unemployment falls to 7%, currently it stands at 7%. The Bank doesn’t see the figure reaching its target until 2016.
“We are giving confidence that interest rates won’t go up until jobs, incomes and spending are recovering at a sustainable pace,” Carney said. “Guidance provides you with certainty that interest rates will not rise too soon. Exactly how long they stay low will depend on the progress of the recovery.”
Carney also announced in his speech that the BOE will relax liquidity rules in an effort to encourage lending and assist the recovery.
Against the US Dollar, Sterling softened as tensions over Syria supported the safe haven ‘Greenback’.
Current Pound Sterling (GBP) Exchange Rates:
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5492
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7372>
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9982 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6454 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8631 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5756 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5004 <
(As of 14:30 pm GMT)
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