IND: Pound slides against dollar after revelation that Bank of England
A shock vote from Bank of England Governor Sir Mervyn King to pump an extra £25 billion into the UK’s struggling recovery gave the pound a fresh hammering today.
News of the Governor’s surprise decision emerged in the minutes of the latest meeting of the Bank’s monetary policy committee two weeks ago — published today — which showed swelling support for arch-dove David Miles.
The Bank’s markets director, Paul Fisher, also pushed for an extra £25 billion in quantitative easing, although the trio were outvoted by the other six members.
Sterling immediately fell by more than a cent to an eight-month low against the dollar and a 16-month low against the euro as the monetary policy committee weighed other options including even deeper interest rate cuts. This month’s meeting was the first time since last June that the outgoing Governor has found himself in a minority on the MPC.
Sir Mervyn’s vote is all the more surprising after he warned last week of persistently high inflation for at least two more years. Royal Bank of Scotland economist Ross Walker said: “The MPC has shifted in a more dovish, proactive direction.”
