Pound strengthens as Bank of England's Mark Carney rejects more money-printing
Bank of England Governor Mark Carney lifted the pound today with his most explicit rejection yet of more money-printing to aid the recovery.
The pound ticked up to $1.6084 as the Canadian, pictured, said in an interview that the recent signs of life in the economy had put the Bank’s £375 billion quantitative easing (QE) programme on the back-burner. “My personal view is, given the recovery has strengthened and broadened, I don’t see a case for quantitative easing and I have not supported it.”
Three members of the Monetary Policy Committee were voting for an extra £25 billion in QE until June. But this month rate-setters were unanimous that the economy was in no need of further stimulus, and the committee is now signed up to forward guidance, under which it will not consider interest rate rises until unemployment falls to 7%. The economy grew 0.7% between April and June and is on course for even stronger growth in the current quarter.
Neil Mellor, currency strategist at BNY Mellon, said: “Carney is more of a pragmatist than the out-and- out dove the market has painted him as. Don’t forget that in Canada he introduced forward guidance and just over a year later he was raising interest rates.”
The Treasury has asked the Bank to play a bigger role in assessing the impact of its Help to Buy programme, which critics have said might cause a new property boom. Carney said the Bank “needs to be vigilant” about the dynamics of a recovering housing market.
Carney also gained a vote of confidence from the City’s fund managers, with a majority confident he will be an improvement on his predecessor, Lord King. Six in 10 fund managers polled by spreadbetter Capital Spreads said they believe he will do a better job on the economy, with 17% of those questioned saying he will be a “significant” improvement. “Clearly the George Clooney of central bankers is going down a storm with City investors,” said Capital Spreads’ Nick Lewis.
