Bank's Governor says QE should not be seen as provocative

Sir Mervyn King has insisted money printing by central banks should not be considered provocative shots in a global "currency war" and that each country should focus on doing what is necessary to restore growth.

"Domestic monetary policy should be conducted for domestic reasons, and if we follow this the global economy will accelerate," the Governor of the Bank of England said in Tokyo. "If a country is pursuing policies to improve the domestic economy, that could push down the currency a bit, but it would lead to increased domestic spending."

Earlier this month, G7 central bankers and political leaders released a statement pledging that they would not engage in competitive devaluations. The Japanese government, which has promised to step up its central bank's purchases of government bonds, has been widely accused of targeting a lower exchange rate in order to boost exports.

It was also revealed last week that Sir Mervyn voted for £25bn more money printing in the UK earlier this month, although the Bank kept its £375bn quantitative easing on hold. The pound has slipped by around 7 per cent against the US dollar and 7.5 per cent against the euro since the beginning of 2013. Several members of the Bank's Monetary Policy Committee have indicated that they would welcome a lower value of sterling to facilitate an economic rebalancing for the UK towards exports.

Sir Mervyn expressed frustration earlier this month when G7 officials briefed that the group's statement had been an indirect criticism for Japan for its attempted devaluation, even though the country was not named.

"I didn't expect that other so-called officials would be out there giving unattributable briefings both before and after the statement, trying to claim that the statement said what it didn't say," he told the February Inflation Report press conference.

Giving evidence to the Treasury Select Committee, Paul Tucker, a deputy governor of the Bank, said that the UK should not withdraw monetary stimulus until the economy has achieved "escape velocity", echoing a phrase used by Mark Carney, the head of the Bank of Canada who will replace Sir Mervyn in July.

Independent Comment
blog comments powered by Disqus
News in pictures
World news in pictures
       

Day In a Page

James Pembroke: The man who's eaten everywhere

The man who's eaten everywhere

Few people know more about restaurants than James Pembroke, who only spent five mealtimes at home during his entire childhood.
A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

A Berliner in 1963 – but did John F Kennedy once admire Adolf Hitler?

The young JFK praised 'superior' Nordic races during visits to Germany
Banned Iranian director Mohammad Rasoulof to attend Cannes Film Festival 2013, his first public appearance since prison

Banned Iranian director to attend Cannes Film Festival

Mohammad Rasoulof to make his first public appearance since being imprisoned three years ago
Seeing the larger picture: Inspiring images of space

Seeing the larger picture: Inspiring images of space

An exhibition explores images how photography has shaped astronomy
Eat Spam and carry on: Wartime pamphlets could teach us a thing or two about healthy, thrifty eating

Eat Spam and carry on

Wartime pamphlets could teach us a thing or two about healthy, thrifty eating
Facial hair: Cat beards and the purrrsuit of excellence

Facial hair

Cat beards and the purrrsuit of excellence
The 10 Best salt and pepper sets

The 10 Best salt and pepper sets

Whether they're for everyday use or to make your dining table look just right, it's worth getting a stylish shaker...
Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Ferran Soriano: Predicting success if Manchester City 'vision' is followed

Chief executive says trophies will come if a 'core' of suitable players is in place
Thomas Müller: We couldn't handle losing a Champions League Final again

Thomas Müller: We couldn't handle losing a Champions League Final again

The Bayern Munich forward tells Tim Rich his side have to shed chokers' tag after two recent final defeats
Giro d'Italia: The Stelvio Pass - cycling's killer climb

The Stelvio Pass - cycling's killer climb

As the Giro d'Italia tackles the brutal climb, Simon Usborne takes on the snow and switchbacks – and soon realises what the fuss is about
National archives: Edward VIII’s phone calls - and how MI5 bugged them

Edward VIII’s phone calls - and how MI5 bugged them

Newly unearthed papers reveal a shocking extra dimension to the constitutional crisis over monarch’s abdication
Sent down at the Old Bailey: A tour of the world's most famous court

Sent down at the Old Bailey

A tour of the world's most famous court
Hollywood's random acts of red-carpet kindness

Hollywood's random acts of red-carpet kindness

The Hangover actor Zach Galifianakis’s date for his movie premieres isn’t arm candy  – it’s his 87-year-old friend who he saved from homelessness
British football scores an own goal

British football scores an own goal

Many managers barely survive a year in post. Martin Baker talks to experts who make a case for clubs using forensic business skills to find the best staff
James Lawton: Sergio Garcia cracks as major fault line opens up again

James Lawton

Sergio Garcia cracks as major fault line opens up again