LONDON (Reuters) - Bank of England Deputy Governor Ben Broadbent kept mum on his views about interest rates on Tuesday, prompting financial markets to assume he sees no pressing need to change.
Sterling hit an 8-month low against the euro as a result. EURGBP=
Broadbent’s speech in Aberdeen to the Scottish Council for Development and Industry had been keenly watched as a chance to hear the views of a rate-setter who has not commented publicly since the Monetary Policy Committee came unexpectedly close to raising interest rates for the first time in a decade last month.
But Tuesday’s comments shed little light.
Instead, he spoke on how a reduction in trade between Britain and the European Union would harm both economies and causes prices to rise.
His trade comments came after businesses last week pressed Prime Minister Theresa May to negotiate a smooth Brexit when Britain leaves the EU in just under two years’ time, saying an abrupt departure would deter trade and investment.
If Britain could not trade easily with the EU, it would end up having to produce more of the things it is less efficient at creating and currently imports, Broadbent said.
“All else equal, the first shift - i.e. away from services exports - would tend to lower UK income, the second to raise certain costs - that is, of food and machinery,” he said.
“Trade really is mutually beneficial and less of it costs us all,” he added.
But it was his views on interest rates that were missing.
The MPC split 5-3 in favor of keeping rates at a record-low 0.25 percent, and since then both BoE Governor Mark Carney and chief economist Andy Haldane — who backed keeping rates on hold — have shown some willingness to consider a rate rise this year.
Several analysts have said the views of Broadbent — who is deputy governor for monetary policy — will be key to assessing the chances of a first BoE rate hike in a decade.
Broadbent has yet to dissent against the views of Carney since taking up his post as deputy governor in 2014.
Newcomer Silvana Tenreyro, who replaced hike advocate Kristin Forbes this month, has also not spoken publicly.
“You have to scrape the barrel to get Broadbent’s views ahead of the August MPC. If scraping I would say (this) points to a ‘no change’ vote given recent weak exports data,” said Simon French, chief economist at stockbroker Panmure Gordon, on Twitter.
Previously, Broadbent has sounded cautious about the outlook for economy as Britain negotiates its departure from the EU.
In March he said British exporters cannot count on enjoying the “sweet spot” which was created by the Brexit vote last year for long.
Last week MPC members Ian McCafferty and Michael Saunders said they were upbeat about the ability of exports and investment to help offset a slowdown in consumer spending.
Editing by David Milliken/Jeremy Gaunt