Bank of England Sought to Drive Pound Lower, Blanchflower Says

The Bank of England’s Monetary Policy Committee sought to boost the British economy by lowering the value of the pound, said David Blanchflower, a member of the committee from 2006 through 2009.

Bank of England Governor Mervyn King shared his belief that a lower exchange rate for the British pound would help bolster the economy, Blanchflower, an economics professor at Dartmouth College, said at the Bloomberg European Debt Briefing conference hosted by Bloomberg Link in New York today.

“I took a very conscious view, and Mervyn King pretty much took the same view, that we were going to do everything in our power to torque the exchange rate down,” said Blanchflower, who is also a columnist for Bloomberg News. “For a long time that’s what we were targeting, and we managed to get it down by about 25 percent -- the exchange rate, that’s had a huge benefit to the U.K. economy.”

The pound reached a 26-year high of $2.1161 in November 2007 before falling to a 24-year low of $1.3503 in January 2009 as the global financial crisis deepened.

The U.K. economy grew at an average pace of 0.1 percent during the 2006 to 2009 period, ending with six consecutive quarters of contraction, according to the U.K. Office for National Statistics.

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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