The Governor of the Bank of England Mervyn King says the MPC should maintain the record low interest rates because the UK’s weak wage growth indicates that the current above-target inflation will be temporary.
However, Mervyn King is uncertain about the perspectives of increasing the key interest rate, saying that it is impossible to anticipate when the toughening of monetary-and-credit policy will be necessary.
"We could have raised bank rate significantly so that inflation today would be closer to the target. But that would not have prevented the squeeze on living standards arising from higher oil and commodity prices and the measures necessary to reduce our twin deficits. And it would have meant a weaker recovery, or even further falls in output, despite our having experienced the worst downturn in output and spending since the Depression," he told during his Mansion House speech on June 15th.
FOREX.
The British Pound is still under pressure. According to the Department of studying Masterforex-V trading system , GBPUSD keeps retracing (level H8): after a bearish FZR H8 the price is forming wave a(C ) or C of the same wave level.
The downward movement will probably continue down to 1,6057. If the price break below the support, the retracement wave a(C ) or C will increase its wave level up to Daily1. A rally will become possible only if the price breaks above MF pivot and sloping channel - the current resistance levels.
