The Bank of England's Mervyn King has said that people should believe in sterling despite its recent poor performance. The Bank's governor was speaking to MPs on the Treasury Committee this morning when he gave assurances about the UK's currency, commenting: "I see no reason why sterling should go any lower or why there should be a loss of faith in sterling." In his opening statement, he also reacted to CPI data that shows inflation was 3.2% last month, observing that inflation in the UK is currently still above target. He also defended the decision to slash the base rate by four and a half percentage points in the last six months, stating: "The Monetary Policy Committee has moved to ease monetary policy more quickly than at any other point in the Bank of England's entire history." On quantitative easing, he said that the £75 billion programme had started successfully and that the Bank has purchased approximately £10 billion of assets thus far. "It will take time for all of these measures to work," he admitted. "But I believe they will ultimately be successful and at some point a withdrawal of the extraordinary stimulus will be required."
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