Bailey: Bank of England ‘won’t hesitate to change interest rates as necessary’ to get inflation to 2%

Bank of England Gov. Andrew Bailey on Monday said the institution is “monitoring developments in financial markets very closely” after the British pound fell to an all-time low versus the U.S. dollar. In a statement, Bailey acknowledged the U.K. Treasury’s unveiling Friday of its budget plan and further details released Monday. Large tax cuts were blamed by analysts and traders for a sharp selloff in the pound. In his statement, Bailey said he welcomed the government’s “commitment to sustainable economic growth, and to the role of the Office for Budget Responsibility in its assessmetn of prospects for the economy and public finances.” Bailey said the BOE’s Monetary Policy Committee, or MPC, has made clear it will make a full assessment at its next meeting of the impact on demand and inflation from the government’s announcements and the fall in the pound, and act accordingly. “The MPC will not hesitate to change interest rates as necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit,” Bailey said. The British pound GBPUSD, -0.11% was down 1.1% at $1.0702 in recent trade. It fell as low as $1.0349 in Asian trading hours.