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BOE's faith in weak pound 'misguided'

Monday, February 08, 2010

Source: Catherine Deshayes

The Bank of England (BoE) is misguided in relying on a weak pound to boost the economy, according to City experts...

Mark O'Sullivan, director of dealing at leading foreign exchange firm Currencies Direct, said: "The Bank of England is putting a lot of faith in a weak pound, the easing of credit conditions and a fall in inflation to translate into a domestic stimulus for the UK economy.

"We feel this could be a somewhat misguided view and that a continued low interest rate environment is going to be needed for the foreseeable future.

"Although the pound remains unchanged on the news that the BoE has kept interest rates on hold at 0.5 % for the 12^th consecutive month and that it has paused the £200 billion quantitative easing programme, the prospect of the BoE returning to the market if UK growth dips again, cannot be ruled out."