Forex Flash: BoE to be utilize more unconventional approach – Goldman Sachs

According to the Economics Research Team at Goldman Sachs, “The UK’s disappointing growth performance primarily reflects insufficient demand and short-term supply factors, rather than long-term weakness in the supply capacity of the economy. For this reason, we sympathize with those who argue that the BoE could and should do more to support the recovery – ‘effective’ interest rates in the UK have remained stubbornly high and credit availability has been too tight.”

However, this has more to do with the BoE’s reluctance to engage in credit easing measures – such as the FLS – than with the BoE’s remit. “We expect the BoE under Governor Carney to be more prepared to undertake ‘unconventional unconventional’ policies of this type, with or without a change in the BoE’s remit.” the team adds.