Bank of England and Treasury respond to fall of Sterling
The Bank of England and HM Treasury released updates as the Pound fell greatly in value following the government’s fiscal announcements.
The Chancellor of the Exchequer, Kwasi Kwarteng, announced that he will outline further regulatory reforms to the UK’s financial services in the next month. He will then set out his Medium-Term Fiscal Plan on 23 November in which further details on the government’s fiscal rules will be made public.
In the ‘Growth Plan’ on Friday, the Chancellor set out that there would be an Office for Budget Responsibility forecast this calendar year. He has requested that the OBR sets out a full forecast alongside the Fiscal Plan, on 23 November.
In a statement the governor of the Bank of England, Andrew Bailey, sought to give some reassurance that current developments in financial markets were being monitored very closely and that the bank would take any necessary action.
He said: “In recent weeks, the Government has made a number of important announcements. The Government’s Energy Price Guarantee will reduce the near-term peak in inflation.
“Last Friday the Government announced its Growth Plan, on which the Chancellor has provided further detail in his statement today. 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.
“The role of monetary policy is to ensure that demand does not get ahead of supply in a way that leads to more inflation over the medium term.
“As the MPC has made clear, it will make a full assessment at its next scheduled meeting of the impact on demand and inflation from the Government’s announcements, and the fall in sterling, and act accordingly.
“The MPC will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term, in line with its remit.”