Bank of England Governor Andrew Bailey said on Monday that the BoE “will not hesitate” to raise interest rates if needed to meet its two per cent inflation target, and that it was watching financial markets “very closely” following sharp moves in asset prices.
Sterling fell to a record low against the U.S. dollar earlier on Monday in Asian trading, extending losses that had accelerated on Friday after finance minister Kwasi Kwarteng gave his first fiscal statement, promising big tax cuts.
“The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets,” Bailey said in a statement.
“The MPC will not hesitate to change interest rates as necessary to return inflation to the two per cent target sustainably in the medium term, in line with its remit,” he added.
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Shortly before the BoE statement, finance minister Kwasi Kwarteng said he would publish a medium-term fiscal plan on Nov. 23, and the Office for Budget Responsibility would publish updated growth and borrowing forecasts.
“I welcome the government’s commitment to sustainable economic growth, and to the role of the Office for Budget Responsibility in its assessment of prospects for the economy and public finances,” Bailey said.
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