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Sterling’s rise: A case of delayed overshooting?
Author(s) -
Breedon Francis
Publication year - 1998
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/1468-0319.00120
Subject(s) - treasury , economics , keynesian economics , argument (complex analysis) , monetary policy , overshoot (microwave communication) , exchange rate , monetary economics , macroeconomics , law , political science , medicine , engineering , electrical engineering
In this article Francis Breedon discusses how sterling’s rise over the last 6 months can be explained in terms of a delayed overshooting reaction to past monetary policy. Although the timing is still hard to judge, it seems that this effect should now begin to wear off, allowing sterling to fall – particularly against the DM. As far as future monetary policy is concerned, this delayed overshoot is another argument for the Treasury and Bank of England undertaking a more activist exchange rate policy, perhaps following the example of another open economy on the fringes of EMU – Switzerland.