LONDON (AFX) - The Treasury and the Bank of England joined forces last night to dismiss talk of early entry for sterling into the single currency when they warned that attempts to massage sterling lower would put the health of the economy at risk, reports the Guardian. Ed Balls, chief adviser to the Treasury, and Sir Eddie George, the governor of the Bank of England, stressed that there would be no moves to push sterling down artificially.
Ball said in a lecture in London that Gordon Brown, the Chancellor of the Exchequer, understood the problems caused by a high pound. "Any short-term attempt to manipulate the exchange rate, overtly or covertly, would put both the inflation target and -- as in the 1980s -- wider stability at risk," he said.
"The objective of UK monetary policy is and remains clear and unambiguous -- to meet a symmetrical inflation target of 2.5 pct," he added. "The government's objective for the exchange rate remains a stable and competitive pound in the me dium term. But there is no short term exchange rate target competing with the inflation target."
Meanwhile the governor, in an interview on BBC News 24's Business Today, said the level of the pound was "a real obstacle to early entry into the euro" and that sterling needed to be significantly lower than the present 3.15 to 3.20 German marks.