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BoE gets long to-do list

BoE gets long to-do list

Just five weeks before the appointment of a new governor, the reviews of the BoE’s forecasting capabilities, its liquidity framework and its provision of emergency assistance gave a list of improvements for the institution, which will get far-reaching powers as the country’s top financial regulator in 2013. Bank governor Mervyn King and his deputies signalled support for a number of the suggestions and pledged to evaluate the recommendations and plan changes. The central bank’s oversight body, the Court, launched the three reviews, unique among major central banks, in response to criticism of the bank’s forecasting record as well as its role in the run-up and during the financial crisis in 2007/2008.

It is expected that Britain’s economy will return to modest growth in 2013 after flatlining this year, with developments in the euro zone posing the biggest risk, a leading think-tank said on Friday. Risks to the UK economy are dominated by the external environment,” it said. “Developments in the euro area are most important, both because of trade and financial sector linkages.”

It is also expected that BoE would refrain from more quantitative easing asset purchases over the next few years, adding that Britain’s monetary policy was likely to remain accommodative until 2020. The think-tank reiterated its view that Britain’s austerity measures pushed through by the governing coalition continued to damage the country’s recovery.

The  GBP is the standout performer in the FX markets this morning with GBP/USD hitting a two week high at 1.6176 and the EUR/GBP cross being offered back towards the 0.8000 level. This is despite the weaker than expected UK Manufacturing PMI data as focus remains on the overnight comments from the BoE deputy governor Bean on QE.

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