FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, notes that the pound weakened yesterday with comments from BOE officials, including Governor Carney, in testimony at parliament suggesting there is no rush to alter the communication on rates going forward. Key Quotes “Indeed, it is clear that BOE officials have a close eye on credit growth in the household sector and that this may well be tackled by macro-prudential measures – a sign that the BOE does not yet want to use monetary policy to tackle increasing credit growth.” “Governor Carney added that the BOE was very conscious of the still high level of household debt and were studying closely how rate increases would hit consumption. Still, the BOE remained optimistic over continued strong domestic demand that will persist despite the expected fiscal drag as the government looks to make headway toward achieving a budget surplus by 2020.” “We will get more details on those plans today with Chancellor Osborne outlining his departmental spending plans in his Autumn Statement. The FT is reporting today that the focus today will be very much on trying to boost housebuilding to bring house prices down in an attempt to offset the negative fallout from his failed attempts to raise GBP 4.4bn through cuts to tax credits.” “A source of revenue for the Chancellor today might come from lower than expected inflation and interest rates, which is estimated to raise between GBP 1-2bn extra cash. There is also a high risk that the estimated GBP 10bn budget surplus originally forecasted by 2020 will be reduced. As always today will be about ‘spin’ and the government spin will be about helping “workers” through some additional policy measures.” “But given Osborne’s self-imposed rules, and given the probability of having to water down the GBP 4.4bn revenue from tax credit cuts, huge departmental spending cuts over the coming give years are likely to be confirmed, with 25% cuts estimated for unprotected departments over the period to 2020.” “The fiscal squeeze is one reason the financial markets expect such a time lag between a Fed rate increase and an increase from the BOE. If Osborne sticks to his guns the pound may well remain under downward pressure over the near-term.” For more information, read our latest forex news.