MPC voices fears over sterling strength

The Monetary Policy Committee (MPC) voted unanimously to hold the bank rate at 0.5% at the last meeting, while all but one member voted to maintain the QE programme at £375bn.

The MPC said, however, that substantial headwinds to economic recovery remain, and that sterling could hinder the rebalancing of the economy. The minutes of the meeting held on 9 and 10 January warned: "Substantial headwinds to recovery remained, including the drag to activity from fiscal consolidation, a further squeeze in household real incomes, and the deterioration in UK competitiveness over the past couple of years. "Indeed, the existence of a significant current account deficit at a time of subdued activity and spare capacity suggested that the sterling real exchange rate might ...