Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Pound slumps as Mervyn King backs QE increase

Pound slumps as Mervyn King backs QE increase

Sterling slumped even further against the euro and US dollar after the Bank of England revealed that governor Mervyn King was among a trio of monetary policy committee members who want further quantitative easing.

King voted alongside Paul Fisher and David Miles to raise the stimulus scheme by another £25 billion to a total of £400 billion, but the three were outvoted by the six other members of the committee at their meeting two weeks ago.

The support for more QE marks a shift from previous votes where only Miles had voted for more stimulus. King, who is to be replaced by Mark Carney in the summer, said a week ago that there was ‘cause for optimism’ for a UK economic recovery, but also indicated that it might be acceptable for the Bank to temporarily miss its inflation target.

The pound, which had already been trending lower, shot down 0.8% against the euro to €1.1431. sterling lost 0.5% against the US dollar to $1.5350. The decline continues a trend of pound weakness this year as markets target the UK’s weak economy against expectations that the eurozone and US economies are improving.

The minutes from the MPC’s meeting make a case for further QE: ‘Further asset purchases, in part by acting to reduce longer-term interest rates and underpinning the value of a broad range of assets, could help the process of rebalancing the economy, and avoid potentially lasting destruction of productive capacity and increases in unemployment’.

The MPC voted unanimously to keep the base interest rate on hold at 0.5%

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Video special: what Scottish DFMs think of SNP election flop

Video special: what Scottish DFMs think of SNP election flop

As delegates gathered for Citywire Scotland, we asked them their take on the election.

Play Keith Skeoch: 'passive has a part to play'

Keith Skeoch: 'passive has a part to play'

In the third part our series, Skeoch outlines his vision for Standard Aberdeen.

2 Comments Play Keith Skeoch: why I believe markets will make 'substantial returns'

Keith Skeoch: why I believe markets will make 'substantial returns'

In an exclusive interview, Standard Life CEO Keith Skeoch tells us why he takes an optimistic view on markets just about everywhere.

Read More
Your Business: Cover Star Club

Profile: Rathbones' fund boss on spotting emerging talent

1 Comment Profile: Rathbones' fund boss on spotting emerging talent

A great fund manager is really easy to spot, says Mike Webb, chief executive of Rathbones Unit Trust Management

Wealth Manager on Twitter