BoE’s main transmission mechanism ‘is the pound’

<p>The pound has been called the main transmission mechanism of the BoE.</p>

The Bank of England's main mechanism for transmission is the pound, it has been claimed.

According to Morgan Stanley, the pound is the main way for the Bank to either loosen or tighten its monetary policy.

Ian Stannard, head of European currency strategy at Morgan Stanley in London, stated that as sterling comes under pressure, the monetary policy interpretation is changing.

Speaking to Bloomberg, he said: "The Treasury market is the main transmission mechanism, particularly given that the US household is directly linked to the Treasury market."

The pound has been slipping against the dollar over the course of recent weeks but over the course of trading today (March 14th), it has strengthened slightly.

Earlier this week, the pound dropped on the back of weak manufacturing data.

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