Broadbent’s BoE appointment keeps hawks in health
Ben Broadbent’s appointment to the Monetary Policy Committee ought to dispel any notions that the Bank of England would be left short of hawks after the departure of Andrew Sentance.
A brief look at the history of Reuters polls shows that Goldman Sachs’ UK economists – led by Broadbent – were uber-hawkish in their outlook for British interest rates early last year.
In January 2010, Goldman predicted rates would rise to 1.5 percent by end of the second quarter of last year, and 2.5 percent going into 2011 — hugely out of step with both the consensus and as it turned out, reality. Rates went nowhere last year, and are still at a record low of 0.5 percent.
Towards the end of 2011, Broadbent’s team moderated their forecasts significantly, coming in line with the consensus for an interest rate hike coming deep into this year.
But his latest set of forecasts resumed a hawkish tone, with an expectation for three 25 basis point rate hikes this year, and a further four in 2012. The consensus view from a Reuters poll on March 3, by comparison, was more restrained: a quarter-point hike to 0.75 percent by the end of the third quarter, before finishing this year at 1.0 percent.
With thanks to Sumanta Dey and Sarmista Sen from the Bangalore Polling Unit