Factbox - Growth worries shift power to Bank doves
LONDON |
LONDON (Reuters) - A run of disappointing data and signs that price pressures are near a peak have strengthened the hand of the doves on the Bank of England, making an interest rate an unlikely prospect until well into next year.
Indeed, it is not inconceivable that another policymaker joins Adam Posen in August to call for more stimulus for the economy, or that Spencer Dale and Martin Weale abandon their call for higher interest rates to vote with the pack.
The BoE will publish quarterly growth and inflation forecasts on August 10. These projections -- which have been triggers for policy shifts in the past -- will already be known by the Monetary Policy Committee and will form the basis of Thursday's policy meeting.
Here is a summary of the public positions of the Bank's nine rate-setters. Five are full-time BoE employees. The remaining four are "external" members appointed from industry or academia.
BANK OF ENGLAND GOVERNOR MERVYN KING
(July vote -- no change to policy)
King was initially known as something of a hawk on the MPC but after the financial crisis of 2008 he led the charge to slash interest rates and launch quantitative easing, the purchase of assets using the Bank's balance sheet.
Giving evidence to parliament's Treasury committee in June, King said consumer spending was likely to remain weak and indicated that any rise in interest rates was likely to be some way off.
"The reason we would raise interest rates would be in the context of a much stronger economy with unemployment falling rather than rising," he said.
BANK OF ENGLAND DEPUTY GOVERNOR CHARLES BEAN
(July vote -- no change to policy)
Bean is a "middle of the road" voter who has largely toed the majority line when it comes to policy changes. A former BoE chief economist, he is now the deputy governor in charge of monetary policy.
Bean has made few public comments recently. In his last major speech in May he said the BoE had chosen to accept a temporary period of above-target inflation so as to avoid an even sharper knock to the economy or living standards.
BANK OF ENGLAND DEPUTY GOVERNOR PAUL TUCKER
(July vote -- no change to policy)
Tucker is deputy governor in charge of financial stability and stands on the more hawkish end of the spectrum.
Giving evidence to parliament's Treasury Committee in June, he indicated that he would be reluctant to vote for more monetary stimulus.
"The threshold for me is high. I'm one of those that is worried about an upward drift in inflation expectations.
BANK OF ENGLAND CHIEF ECONOMIST SPENCER DALE
(July vote -- 25 basis point rate rise)
Dale has been voting for higher interest rates since February, when he joined Sentance and Weale in arguing that the risks to inflation warranted immediate action.
Dale gained a reputation as a hawk in November 2009 when he was the only member of the committee to vote against an expansion of quantitative easing.
BOE EXECUTIVE DIRECTOR FOR MARKETS PAUL FISHER
(July vote -- no change to policy)
Fisher stands on the dovish end of the spectrum and argues that interest rates should not rise before the economy recovers.
In an interview in June, he said the recovery remained fragile and further monetary loosening could still be needed.
"If we get stuck in a deflationary rut, it's not clear we have sufficient ability to get out of that quickly," he said.
"I've said in the past it (QE) is still very much on the table as one of our potential policy actions, and it's certainly not ruled out, and people need to be aware of that.
EXTERNAL MEMBERS
BEN BROADBENT
(July vote - no change to policy)
Broadbent has voted with the majority to keep rates at 0.5 percent in his first two meetings.
His reputation while working as an economist at Goldman Sachs was slightly hawkish, but since his appointment to the Monetary Policy Committee he has given little away about his long-term views.
DAVID MILES
(July vote -- no change to policy)
Miles began a three-year stint on the MPC in June 2009, having previously worked as chief UK economist at Morgan Stanley.
He is considered one of the more dovish members, and warned last week that there was a risk Britain's economy could tip back into recession.
"In the first part of 2010, the recovery looked to be gaining momentum. But more recently it appears to have slowed."
"There is a risk the economy could fall back into recession, though I do not believe this is the most likely outcome.
ADAM POSEN
(July vote -- expand QE by 50 billion pounds)
Posen, a U.S. academic, is the arch-dove on the committee. Since October he has urged fellow policymakers to expand the Bank's quantitative easing programme.
"I am hopeful that the decision will be taken to undertake more QE, that's what I have been arguing for," he told Sky in a recent interview.
MARTIN WEALE
(July vote -- raise rates by 25 basis points)
Weale surprised markets by joining Sentance in voting for a 25 basis point rate rise in January, having previously been seen as a moderate.
He joined the Bank's Monetary Policy Committee in August 2010 having previously headed the National Institute of Economic and Social Research.
Weale is concerned about damage to the Bank's inflation-fighting credibility and argues that a small rate rise now could prevent a more aggressive tightening further down the road. However, he acknowledged in a newspaper interview that there was a risk the economy could slip back into recession.
(Reporting by Christina Fincher)
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