This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-37675907
The article has changed 3 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Pound fall a 'shock absorber', says BoE's Ben Broadbent | Pound fall a 'shock absorber', says BoE's Ben Broadbent |
| (about 2 hours later) | |
| The fall in the value of sterling has acted as an important "shock absorber" for the economy, according to Bank of England deputy governor Ben Broadbent. | The fall in the value of sterling has acted as an important "shock absorber" for the economy, according to Bank of England deputy governor Ben Broadbent. |
| He told BBC Radio 5 live that having a flexible currency was "extremely important" to cope with shocks. | He told BBC Radio 5 live that having a flexible currency was "extremely important" to cope with shocks. |
| "In the shape of the referendum, we've had exactly one of those shocks," he said, but added the Bank would not intervene to boost the pound's value. | "In the shape of the referendum, we've had exactly one of those shocks," he said, but added the Bank would not intervene to boost the pound's value. |
| Sterling has fallen nearly 20% against the dollar since the referendum. | Sterling has fallen nearly 20% against the dollar since the referendum. |
| On Monday it was trading at below $1.22 and €1.11, having fallen more than 5% in October on concerns about the economic impact of the UK leaving the European Union. | On Monday it was trading at below $1.22 and €1.11, having fallen more than 5% in October on concerns about the economic impact of the UK leaving the European Union. |
| Mr Broadbent, one of three deputy governors at the Bank, said: "Having a flexible currency is an extremely important thing especially in an environment when your economy faces a shock that is different to your trading partners". | Mr Broadbent, one of three deputy governors at the Bank, said: "Having a flexible currency is an extremely important thing especially in an environment when your economy faces a shock that is different to your trading partners". |
| Allowing the pound to react "is a very important shock absorber". | Allowing the pound to react "is a very important shock absorber". |
| Rising prices | Rising prices |
| Bank governor Mark Carney said on Friday that sterling's weakness would lead to higher prices, a finding that has since been underlined in a report from the EY Item Club think tank. | |
| The latest inflation figures will be released on Tuesday, with economists expecting prices to have risen 0.9% in the year to September. | |
| Mr Broadbent said it was "likely" that inflation would rise above the Bank's 2% target in the next couple of years. | Mr Broadbent said it was "likely" that inflation would rise above the Bank's 2% target in the next couple of years. |
| Tesco's dispute with Unilever last week over the rising price of Marmite illustrates how a weak pound could push up inflation, he said. | Tesco's dispute with Unilever last week over the rising price of Marmite illustrates how a weak pound could push up inflation, he said. |
| Mr Broadbent, a Marmite fan who said he "loves" the stuff, said the rising cost of foreign holidays would also contribute to inflation. | Mr Broadbent, a Marmite fan who said he "loves" the stuff, said the rising cost of foreign holidays would also contribute to inflation. |
| Trade off | |
| However, Mr Broadbent warned that controlling prices with tighter monetary policy could hit growth and jobs. | However, Mr Broadbent warned that controlling prices with tighter monetary policy could hit growth and jobs. |
| Raising interest rates to meet the Bank's inflation target could lead to "undesirable consequences" such as lower growth and higher unemployment, he said. It's a "trade off", he added. | Raising interest rates to meet the Bank's inflation target could lead to "undesirable consequences" such as lower growth and higher unemployment, he said. It's a "trade off", he added. |
| The deputy governor spoke to the BBC after a forum with university and A-level students in Derby where he explained what the Bank does. | |
| At the moment "we don't really teach" financial education, he told the BBC. | |
| To help people understand the issues better, schools should teach about debt, the banking system and financial decision-making, he said. |