Sentance drops a bomb shell
Andrew Sentance reached the end of a five year tenure as a Bank of England policymaker yesterday and came out with comments that The BoE is in danger of losing its credibility as the British public is losing faith in the Bank’s ability to reign in soaring inflation.
For the past 12 months, Sentance has called for a rise in the low interest rate in an attempt to control inflation but his fellow colleagues have outvoted him in calling for the rate to be unchanged at 0.5%
Sentances comments did little to boost the pound today as markets are still expecting the rate to be left unchanged at next weeks decision. It is very unlikely that the MPC will listen to Sentances comments now that he has left his position.
The BoE are stuck between a rock and a hard place at present as the economy can not handle a rate rise. Eventually though we will have to see rates increase. I feel the longer we leave them unchanged the more sharply they will have to rise in the future which could effect economic growth and not bring as much strength to the weak pound as we may hope for at the end of the year. I feel that while rates are left unchanged we could see the Pound weaken back down near to last months lows of 1.1050 against the Euro and 1.60 against the USD.
Today was a another poor day for the pound with rates against a host of currencies weakening to extremely low levels against the Kiwi Dollar and Swiss franc. If you have a requirement and would like to speak with me regarding the future outlook for sterling exchange rates then please email me on [email protected]