BoE's McCafferty says unclear if sterling competitive

LONDON Fri Jan 18, 2013 11:31am GMT

The Bank of England building is seen in central London March 20, 2008. REUTERS/Toby Melville

The Bank of England building is seen in central London March 20, 2008.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - New Bank of England policymaker Ian McCafferty raised doubts on Friday about whether sterling was at the right level to ensure economic rebalancing, and said the central bank should be open to new policies.

Asked in a Bloomberg TV interview whether he would favour a weaker level for sterling to help exports, McCafferty said there "are questions on whether sterling is now at a competitive level in terms of allowing that fundamental rebalancing".

But he said sterling's level alone was not the sole factor behind Britain's relatively weak export performance.

"My impression is the lack of export performance is as much due to lack of demand in our major markets and the fact that our main exports are oriented at relatively slow-growing markets at the moment," he said.

McCafferty also said the British central bank should explore policy alternatives to quantitative easing and its Funding for Lending Scheme if needed, but played down a nominal gross domestic product target.

"It's of use in very unusual circumstances," McCafferty said. "I don't think nominal GDP targeting is a better signal than other methods, and I think there are distinct problems with it, certainly in terms of measurement."

(Reporting by David Milliken; Editing by Catherine Evans)

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