Sterling has taken a tumble to a one-week low this morning, falling over 0.4 per cent against the dollar after Mark Carney pushed back at calls for an interest rate rise.
In the text of his his Mansion House speech this morning, the governor of the Bank of England said that “now is not yet the time” to tighten monetary policy after three rate setters voted in favour of a rise to the BoE’s base rate last week.
Having held broadly steady this morning, the pound slipped as much as 0.5 per cent against the dollar to $1.2691.
Today’s speech is the first time Mr Carney has reacted after the Monetary Policy Committee was split 5-3 between holding or raising rates. It was the biggest split in the committee since 2011, reflecting growing concerns about rising inflation in the UK economy.
Mr Carney said:
From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.
In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.