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In the battle between hawks and doves at the Bank of England, Ben Broadbent has kept his head down and his cards close to his chest. But that might all change today, when deputy governor Broadbent gives a speech in Aberdeen at noon.
Broadbent’s views on interest rate policy could be crucial at the Bank’s next meeting, in August. Economists believe that up to three policymakers could vote for the first interest rate rise in a decade.
Three more, including governor Mark Carney, are likely to vote to leave borrowing costs at their current record low of just 0.25%.
So that means that Broadbent, and new member Silvana Tenreyro, could swing August’s vote.
And excitingly, the public really don’t know what Broadbent thinks about the tricky balancing act facing the Bank of England as it juggles rising inflation, falling real wages, and an economy gripped by Brexit worries.
The pound could surge if Broadbent hints at voting for a rate rise, or fall if he says Britain still needs the boost of record low rates.
Sam Hill of RBC Capital Markets explains why investors will be watching closely…..
At this stage we would anticipate that Mark Carney, Jan Cunliffe and Gertjan Vlieghe will vote for an unchanged Bank Rate at the August meeting, with Andy Haldane, Michael Saunders and Ian McCafferty expected to vote for a hike.
This has put the focus clearly on Broadbent, whose post-election purdah views remain unknown up to this point. If Broadbent signals his views are more aligned with the hawks, short-term UK interest rate expectations are likely to jump again. Conversely, if the Deputy Governor maintains a balanced emphasis to his comments the risk of a near-term rate hike in the UK should recede a little.
However, the views of new MPC member Tenreyro remain unknown, as does the identity of the ninth voter, with the other Deputy Governorship, for Markets and Banking, remaining vacant at this stage following Charlotte Hogg’s departure.
Broadbent’s colleague Andy Haldane is also appearing on a panel today, on numeracy (something the BoE’s chief economist should be familiar with….).
Haldane shook the City up a few weeks ago by hinting that he could vote for a rate rise soon, so we’ll watch out for any market-moving comments from him today.
Also coming up today…
Haldane and Broadbent aren’t the only central bankers out and about today. Benoît Cœuré of the European Central Bank is speaking in Frankfurt around lunchtime.
High street stalwart Marks & Spencer is holding its annual general meeting today, at Wembley Stadium. Campaigners are likely to lobby the company to start paying the living wage, and to stop advertising in a certain newspaper….
European finance ministers will meet in Brussels today for an Ecofin meeting. They’ll be discussing the EU’s action plan to create a capital markets union, and boost the availability of funding to small firms.
We also find out how many job vacancies are available in the US; a good sign of the health of the labour market.
In the City, recruitment firm Pagegroup and insurance firm GoCompare are both reporting results.
European stock market are expected to open a little higher, with the FTSE 100 tipped to gain just nine points.
Here’s the agenda:
- 8am BST: Ecofin meeting of EU finance ministers begins
- 9am: Italian industrial production figures for May
- 11:00am BST: Bank of England’s Andy Haldane appears on a “Essentials of Numeracy” panel.
- 12:00pm BST: BoE deputy governor Ben Broadbent speaks in Aberdeen
- 1pm BST: ECB board member Benoît Cœuré speaks in Frankfurt
- 3pm BST: US JOLTs survey of vacancies released