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.