John Gieve, a member of the Bank of England’s monetary policy committee says that more rate cuts may be needed and that inflation will undershoot the 2% inflation target in the medium-term. A complete seizer of the money markets has been averted, he said but that it is too early to suggest the crisis is over, he said.
Minutes from the BOE meeting this morning showed that the Old Lady considered a cut even larger than the 150 bp cut finally agreed to. Dealers expect rates to fall another 2% in the coming months from the 3% level where they stand today. Cable is down to 1.5030 after topping out just shy of 1.5250 this morning in New York.