U.S. Treasury Secretary Janet Yellen said the United States was monitoring developments in Britain after the government announced a fiscal program that dragged the pound to a record low against the dollar.
What Happened: The financial turmoil seen in recent days appeared to be confined to Britain and was not spreading to the global economy, Yellen told reporters at the end of her visit to North Carolina, the Financial Times reported.
Yellen's comments come as the International Monetary Fund openly criticized Britain's new economic strategy on Tuesday. The IMF reportedly said the fund does not recommend large and untargeted fiscal packages at this juncture, given elevated inflation pressures in many countries, including the U.K.
Last week, Britain’s new Chancellor of the Exchequer Kwasi Kwarteng cut income tax and stamp duty on home purchases and has also done away with a planned hike in business taxes.
No Liquidity Problems: Yellen stated that both the United States and Britain had "significant inflation problems and central banks are focused on wanting to bring inflation down." The Treasury Secretary said financial markets were "still functioning well," and added that they "haven't seen liquidity problems develop in markets."
Price Action: The Invesco CurrencyShares British Pound Sterling Trust FXB has lost over 8% in one month.
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