The pound was firmer following relatively hawkish comments last night from Bank of England governor Mervyn King, which dampened prospects for a cut in interest rates any time soon. Yesterday in Belfast, King told businessmen that the central bank would not lower interest rates simply to make it easier for the financial sector, despite the ongoing liquidity problems, and emphasised it would continue to monitor inflationary risks. "This does not sound like a central bank that is in any rush to cut interest rates, disappointing given the many downside risks to the near-term UK growth outlook," said Audrey Childe-Freeman at CIBC World Markets. King's comments offset a somewhat dovish outlook in the pre-budget report yesterday from Chancellor of the Exchequer Alistair Darling, in which the forecasts for economic growth next year was downgraded, borrowing increased, and growth expectations for household consumption lowered. "The key to the pre-budget report is that tougher times are on the cards as the government tightens its budget belt," said David Brown, chief European economist at Bear Stearns. Elsewhere, the dollar was slightly weaker after minutes from the Federal Open Market Committee's meeting of Sept 18 revealed that the policymakers were unanimous in their decision to cut key Fed Fund rates by a half point to 4.75 pct. However, the FOMC said that its next decision on whether or not to cut rates, "would depend on how economic prospects were affected by evolving market developments and by other factors." The comments scaled back expectations that there would be at least one more rate cut by the end of the year, with financial markets now pricing in just one reduction. "The tone of the minutes does not paint a picture of a bank that is desperate to forge ahead with more rate cuts," said Stuart Bennett, senior economist at Calyon. "Indeed, market expectations now envisage at best only one more 25 basis point rate cut by year end. Meanwhile, the euro was unmoved following surprisingly robust data from France. Statistics office Insee said seasonally adjusted French industrial output for August was up 0.3 pct following a 1.7 pct rise in July, far surpassing expectations for a 0.2 pct month-on-month fall. Calyon's Bennett said French output figures rarely impact the market, but the firm data might allow European Central Bank policymakers "to be a little more relaxed about the potential threat that either the strong euro or the credit crisis will have on French and euro zone activity." The yen remained stable against the dollar ahead of the Bank of Japan's monetary policy announcement tomorrow. Interest rates are expected to be kept on hold at 0.5 pct for the ninth consecutive time.