Download this Paper Open PDF in Browser

The Exchange Rate and the MPC: What Can We Do?

10 Pages Posted: 3 Aug 2005  

Sushil Wadhwani

Bank of England - Monetary Policy Committee

Abstract

In this speech, Sushil Wadhwani, member of the Bank's Monetary Policy Committee, argues that looking only at a two year ahead inflation forecast when setting interest rates is likely to be sub-optimal, and that allowing asset price misalignments to have an additional impact on interest rates could enable a reduction in the volatility of inflation. Currently, sterling is probably 'overvalued' against the euro, and so this might affect the appropriate level of interest rates. Dr. Wadhwani also suggests that, under certain circumstances, sterilized intervention can be effective.

Suggested Citation

Wadhwani, Sushil, The Exchange Rate and the MPC: What Can We Do?. Bank of England Quarterly Bulletin, August 2000. Available at SSRN: https://ssrn.com/abstract=764369

Sushil Wadhwani (Contact Author)

Bank of England - Monetary Policy Committee ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom
+44 20 7601 3235 (Phone)

Paper statistics

Downloads
82
Rank
256,870
Abstract Views
850