Bloomberg News

Pound Declines Against Dollar As IMF Says More Stimulus Needed

May 22, 2012

The pound extended a decline against the dollar and 10-year gilts pared their losses after the International Monetary Fund said Britain requires further monetary easing to boost the economy.

The pound was 0.4 percent weaker at $1.5777 at 10:13 a.m. London time. It fell to $1.5733 last week, the lowest level since March 16. Sterling was little changed at 80.91 pence per euro.

The 10-year gilt yield rose one basis point, or 0.01 percentage point, to 1.86 percent. The yield earlier rose to as high as 1.90 percent.

The Bank of England needs to inject more stimulus into the U.K. economy through more bond purchases or by cutting interest rates as “large” risks from the euro-area crisis may derail growth and inflationary pressures remain weak, the IMF said in its annual review of the U.K. published today.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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