Here’s why the Bank of England’s hawks are getting it wrong over calls for a rate hike

Pedestrians walk past the Bank of England in the City of London, Britain June 28, 2016.

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Pedestrians walk past the Bank of England in the City of London, Britain June 28, 2016.

The BOE’s monetary policy committee is at its most divided over interest rates since 2011 and Haldane, previously considered to be one of the most dovish members, has now argued it would be prudent to tighten policy before the end of 2017.

Sterling rose on Wednesday, shortly after Haldane’s comments, as investors were forced to reconsider the long-held view that interest rates would remain unmoved until well into 2018.

Bloom bemoaned the “push me, pull you” comments from Carney and Haldane and stressed central banks did not have to “act all the time.”

However, departing BOE rate-setter, Kristin Forbes, warned on Thursday that the U.K.’s central bank could no longer justify keeping interest rates at 0.25 percent.

Speaking at the London Business School, she said, “Many of the factors that have justified keeping interest rates at emergency levels over the past few years have become less potent, and sterling’s depreciation has fundamentally shifted, underlying inflation dynamics in a way that makes it more pressing to begin this voyage soon.”

Conversely, Bloom described sterling weakness throughout Brexit talks as a “safety valve” for the U.K. and argued the Bank of England’s more hawkish policymakers should view Britain’s weakening currency as part of the solution, rather than as part of the problem.

“I don’t see it as… ‘oh the economy is running so hot and inflation is picking up, we need to raise rates’, No, no, no! Is that clear?” Bloom quipped.

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Sterling was trading 0.3 percent higher at $1.2718 on Friday morning though Bloom suggested the U.K.’s currency would continue to weaken throughout Brexit talks.

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