June 22, 2017 / 7:45 PM / 3 years ago

Politics, not rate outlook, is main driver for sterling - BoE's Forbes

LONDON, June 22 (Reuters) - Politics, not the outlook for Bank of England policy, is the main factor currently driving sterling, BoE rate-setter Kristin Forbes said on Thursday.

Forbes said the central bank spent typically a lot of time considering the feedback effects of any rise in interest rates on sterling, and thus on future inflation.

But at present politics seemed to dwarf policy, she said in a question and answer session at the London Business School.

“The exchange rate - no surprise – seems to be much more sensitive to political news, and news especially related to Brexit announcements. That’s not to say monetary policy doesn’t matter. But those effects do seem recently to be dwarfed by other factors,” she said.

Forbes said a possible weakening in consumer spending was a key concern for some of her colleagues, but that her experience of the U.S. economy suggested that households savings rates could fall significantly to support spending when needed. (Reporting by David Milliken; editing by Costas Pitas)

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