James Alexander via Historinhas | In a “currency war” it pays to be the loser. If you need an expansionary monetary policy, like most currency blocs today, don’t let anyone undercut with dirty devaluations. So, when a big baby like China decides to lower the value of its currency versus the biggest baby of all, the USD, make sure you are not caught in the cross fire.
George Osborne’s “dangerous cocktail” warning about foreign threats to UK economic growth was very well timed. And had the desired effect of weakening Sterling against both the USD and the EUR, and even against the weakening CNY. Good one George!
Of course, he has to do the heavy lifting on monetary policy thanks to his AWOL Governor of the Bank of England, Mark Carney. He seems to prefer commenting on Brexit, Climate Change, inequality and phantom inflation threats. On the one he can influence, he’s wrong. Deflation is the more dangerous threat and it would be great to see him showing some interest.