The recent fall in the value of sterling will be taken into account by the Bank of England’s policymakers when they consider the future of interest rates over the coming week.
BoE governor Mark Carney told the House of Lords that sterling was “undoubtedly” something the Monetary Policy Committee will take into account over when it updates its forecasts and makes its decision regarding rates.
Before taking questions at the House of Lords sterling had dropped to $1.2183 against the Dollar.
Carney said the fall in the value of sterling had been “fairly substantial” and the central bank’s rate setters would take it into account.
He said: “It’s undoubtedly something we will take into account over the course of the next week as we sit down, update our forecast and make our policy decision.”
He also added that inflation, which hit 1.0% in the 12 months to September, could hit between 1.5% or 1.8% by spring 2017 and there were limits to the Bank’s willingness to “look through” the effect of annual inflation rising past its 2% target.
Carney was also quizzed on earlier comments from the head of the British Bankers’ Association who said banks were looking to exit the UK in early 2017. He said there were various contingency plans in place for banks to leave London if they saw fit.
On QE he also expressed sympathy for savers who have been hit by the programme but said the Bank was not relying on QE.
Finally he was quizzed on his own future but said it would be a personal decision as to when he would step down and not one related to politics.