Sterling falls to lowest level in four months against euro
STERLING fell to its lowest level in four months against the euro yesterday as Bank of England policymaker Adam Posen said the UK's central bank should restart its asset-purchase programme to prevent persistent slow economic growth.
The pound fell to 85.88p during late trading in London, the weakest level since May 25. That will help Irish businesses targeting the country's largest export market but increase the cost of many imports.
The British currency fell after the Bank of England's Posen said there was "a significant gap between what the economy could be producing at full employment and it currently produces".
"Monetary policy should continue to be aggressive about promoting recovery and, subject to further debate, I think further easing should be undertaken," he said during a speech in Hull yesterday.
Mr Posen's remarks came a day after his colleague Andrew Sentance made his third defence in a week of his unsuccessful attempt to persuade the Monetary Policy Committee (MPC) to raise interest rates to counter a pickup in inflation.
Mr Posen said the panel should set aside worries about inflation. "Policymakers should not settle for weak growth out of misplaced fear of inflation," he said.
While data the same day confirmed the British economy expanded at the fastest pace in nine years in the second quarter, the International Monetary Fund warned on Monday that the Bank of England should restart its asset-purchase programme to stimulate the economy if the recovery falters.