BOE hit squad keep to the rate hike rhetoric in Treasury Select hearing

by | February 21st, 2018, 14:39:45 | BOE, Central Banks

BOE’s Carney, Broadbent, Haldane and Tenreyro all seem to be singing from the same hymn sheet

Carney

  • Does not commit to a specific rate path
  • Does not give guidance on a specific rate path except in exceptional circumstances
  • We are not in exceptional circumstances now
  • Trade off between growth and inflation has diminished
  • Further stimulus withdrawal is needed in coming years
  • Horizon to bring back inflation to target has in moved from 3 years but has not jumped to 2 years in MPC’s collective view

Broadbent

  • Degreee of UK spare capacity has shrunk
  • Squeeze on real household income is past its worst
  • Rise in import costs will continue to feed into the retail space
  • Wage growth looks to be picking up

Haldane

  • To justify rate rises, we’ll be looking for the econ to continue to hold up at around last years growth levels
  • We need to see an upward nudge in price pressures and especially wage growth early in 2018
  • Judges risk of the MPC current forecasts to the upside

Tenreyro

  • Tightening of rates is likely to be stronger than anticipated in Nov

Cable has jumped to 1.3961 from near 1.3930 as the comments are all pretty hawkish. The fact it’s not flying away suggests that the market has just about priced in a May hike.

Ryan Littlestone
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