Wednesday, 11 February 2009

Sterling falls as QE gets closer

Details here.

LONDON, Feb 11 (Reuters) - Sterling slumped against other major currencies on Wednesday, after the Bank of England said it was ready to ease monetary policy further and was willing to take unconventional measures to revive the ailing economy.

BoE Governor Mervyn King said the central bank would discuss so-called "quantitative easing", or buying assets directly to boost the money supply, at its next rate-setting meeting and the key bank rate would not have to fall to zero in order to adopt such measures.

The BoE's quarterly Inflation Report showed growth and inflation forecasts were revised down sharply and the central bank said risks were to the downside.

By 1515 GMT, sterling was down 1.1 percent at $1.4349, after earlier falling to a low of $1.4339, according to Reuters data.

The euro was up 1.31 percent at 90.01 pence, holding near a session high of 90.30 pence.

Interesting to note that MK thinks he can print money before rates reach zero. That would be rather novel and runs the considerable risk that the new money, ink still wet, would get deposited for the interest rather than spent - defeating the purpose of printing.

Obviously sterling is toast now, the smart money leaving.

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