U.K. Chancellor Darling said now is not the time to withdraw money from the economy. In his speech at the Labor Party conference today, Darling stated that “at this time when the economy is slowing down, I don’t think there is anybody who is saying that this is the right time to take a lot of money out of the economy”. Darling echoes weekend comments by Prime Minister Brown, who stressed that increased borrowing was the best option for the government during an economic downturn. Meanwhile, the BoE’s will offer another USD 40B in overnight repo today. Friday’s auction was covered 0.52 times, with the lowest acceptable bid rate at 0.5% and a weighted average rate of accepted bids of 2.803%. Only USD 20.8B was hence allocated and the bid spread was very wide, with strategists speculating that many “cheeky bids” were placed. In the initial USD 40B auction last Thursday, a mere 0.35 times bid to cover ratio was reached.
Amid the increased efforts by Chancellor Darling and the BoE, the British Pound continues to hold with a tight range between 1.8262-1.8385.