By TraderVox.com
​Tradervox (Dublin) – Mervyn King, the Bank of England Governor is expected to present a report explaining the BOE’s move of halting the bond purchases made six days ago despite the grim economic outlook for Europe. The Bank of England governor is expected to present economic forecasts at a press conference.
England economy has shown some signs of recovery, but the current turmoil in Europe has led to the pound increasing by 4 percent in the first quarter of the year. Economists have warned that king must be careful not to fuel further strengthening of the pound which would be detrimental for the economy as it would hurt exports.
The BOE decided on May 10 to hold its target for bond purchases at $524 billion ending the second round of quantitative easing which was started in October. The Governor is also expected to publish the inflation rate report, growth report, and consumer price forecasts tomorrow in London. According to Jens Larsen, an economist in London at Royal Bank of Canada, the move by the BOE is a dovish one with a background of a disappointing growth and worsening of European crisis while on the other hand, then strong pound shows traders willingness to buy UK assets.
Alan Clarke of Scotiabank in London has suggested that king will steer clear of comments that may cause another rally by the pound. The monetary policy officials decided to hold the bond purchases kitty as they forecasted a increase in inflation if they were to increase the QE package.
The pound has increased against all 16 major currencies this year, with a 4.5 percent increase against the euro. Further increase of the pound against the euro is set to hurt the UK exports to euro zone which buys more than half the country’s exports.
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