GBP Strength Could Delay Rate Hike Says BoE Member

Further sterling strength would be a worry and could potentially make the Bank of England delay raising interest rates, BoE policymaker Ian McCafferty said in some of the central bank’s most forceful recent comments on the pound’s rise.

Boosted by Britain’s economic recovery, sterling has strengthened by more than 10 percent against the currencies of its main trading partners in less than a year, and earlier this month it hit its highest level in more than five years.

“Were it to continue to rise, I would get more worried,” McCafferty told Reuters in an interview conducted on Monday afternoon.

“It’s clearly a consideration in terms of total monetary conditions in the economy so we would need to take it into account when determining what the appropriate monetary stance would be going forward,” he said.

The BoE has stressed it is in no rush to raise interest rates – a point McCafferty reiterated – but last year’s unexpected rebound in British economic growth has driven expectations that it might tighten policy before the U.S. Federal Reserve or the European Central Bank.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza