July 7, 2011 / 5:21 AM / 8 years ago

Factbox - Bank of England doves in ascendancy

LONDON (Reuters) - Worries that Britain’s recovery is losing steam are likely to persuade the Bank of England to keep interest rates on hold not only this month but possibly well into next year.

The nine-member Monetary Policy Committee voted 7-2 in June to keep rates at 0.5 percent. Former Goldman Sachs economist Ben Broadbent, who replaced arch-hawk Andrew Sentance, joined the majority in voting to keep rates at a record low.

Minutes to the meeting observed that the recent soft patch could “persist for longer than previously thought” and several policymakers considered more quantitative easing might be needed.

Here is a summary of the public positions of the Bank’s nine monetary policymakers. Five are full-time Bank employees. The remaining four are “external” members appointed by the government from industry or academia.


(June 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 BoE’s balance sheet.

Giving evidence to parliament’s Treasury committee earlier this month, 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.


(June 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.

In a speech in Belfast in May, Bean said the coming years would be difficult, and the Monetary Policy Committee had chosen to accept a temporary period of above-target inflation rather than seek to keep inflation close to the 2 percent target at all times.

“Achieving the latter would have ... depressed activity and pay even more and retarded the requisite rebalancing of the economy.”


(June vote — no change to policy)

Tucker is deputy governor in charge of financial stability and stands on the more hawkish end of the spectrum.

He admitted in May that his vote to keep rates on hold had been “finely balanced” since the end of 2010 and is worried that inflationary pressures may prove stubborn.

Giving evidence to parliament’s Treasury Committee last week, he indicated that he would be very reluctant to embark on more asset purchases.

“The threshold for me (for more stimulus) is high. I’m one of those that is worried about an upward drift in inflation expectations.”


(June 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.

In an interview last month, Dale said inflation was likely to remain above target for much of the next two years. But he also acknowledged that the medium term growth outlook had darkened.


(June 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 last month, 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.”


(June vote - no change to policy)

Broadbent joined the majority voting to keep rates at 0.5 percent at his first meeting last month but has given little away about his longer-term views.

His reputation while working as an economist at Goldman Sachs was slightly hawkish, but at his appointment hearing he sat firmly on the fence.

Asked whether he was a hawk or a dove, he replied: “I’m sometimes one, sometimes the other. I don’t think I’ve always been in the same direction.”


(June 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.

His voting behaviour puts him at the dovish end of the spectrum. Speaking at the end of June, he said monetary policy was not as loose as the current Bank Rate might suggest and further asset purchases may be needed at some point in the future.

He also said that above-target inflation was leading to higher wage growth.

“Without a pickup in wage inflation I do not think it likely that inflation being significantly above target is sustainable,” he said.


(June 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.

He reiterated this call last month, arguing that credit and wage growth were slow and there was little risk of a repeat of 1970s style stagflation.


(June 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.

Reporting by Christina Fincher; Editing by Ruth Pitchford

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