Pound exposed by rates surprise
Sunday 07 May 1995
Mr Clarke's comments on this morning's Frost on Sunday BBC television programme will be carefully analysed for an explanation of his interest- rate decision, despite rising raw material costs, an already weak pound and surging money market rates.
The suspicion is gaining ground that Mr Clarke is preparing to relax the chains that have been holding inflation back, which would imply a potentially damaging disagreement with Eddie George, the Governor of the Bank of England.
Said one dealer: "Clarke has some explaining to do. If sterling continues to fall this week, he is going to look pretty stupid if he has to shore it up with an increase in base rate by Friday."
Sterling will share the spotlight this week with the French franc, as markets react to the result of the French presidential election. If Jacques Chirac should be defeated today by the Socialist candidate, Lionel Jospin, the franc would go into free-fall.
Speculation surrounding the two European currencies should take some of the heat off the US dollar, which has been pulling the pound down with it.
Pressure for a further rise in UK base rates has been generated by the currency and bond markets and is unlikely to disappear quickly. Headline inflation, including mortgage interest, has edged up in the past few months to 3.5 per cent and the underlying rate has reached 2.8 per cent, mainly because of the rise in commodity prices and the decline in the value of the pound against the mark, yen and Swiss franc.
Some economists argue that the case for a rise in rates to control domestic demand was weak and has weakened further since the last increase three months ago, as the growth of output and consumption has visibly decelerated.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
- 3 Number of young homeless people in Britain is 'more than three times the official figures'
- 4 Motorists taunt suicidal woman on bridge and tell her to 'get on with it'
- 5 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
Number of young homeless people in Britain is 'more than three times the official figures'
The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...