Ex-BoE deputy governor: QE2 'disastrous' for sterling

Sir John Gieve, the former deputy governor of the Bank of England, has called for the MPC to scrap plans for further quantitative easing or else risk a 20% devaluation in sterling and higher inflation for longer.

Gieve, a member of the MPC from 2006 to 2009, said the UK should not inject a fresh round of stimulus unless inflation soars because of the impact it would have on sterling, and prices, over the longer term. "In Britain unless inflation gets out of control then there is no need to implement more QE because the likely effect on the exchange rate and inflation could be disastrous," said Gieve. "If there is another 20% devaluation in sterling inflation will remain at 5% for the next five years." He said the UK could opt for a different policy response to the US as the world's largest ...