BoE's Broadbent reinforces message on rate rises
By Sean Farrell
Date: Friday 03 May 2019
(Sharecast News) - The Bank of England's deputy governor reinforced the central bank's stance on interest rates a day after it signalled borrowing costs were likely to rise faster than expected.
The BoE's monetary policy committee left rates unchanged at 0.75% on Thursday. Reiterating guidance for rates to rise gradually the MPC also said markets were underestimating the likely pace of increases.
Following up on the statement, Ben Broadbent, deputy governor for monetary policy, said markets had become too relaxed about the outlook for interest rates. He pushed home the BoE's message that its inflation forecast suggested a firmer response.
"Markets [have been] barely pricing one rise over the next three years and that's rather a change from six months ago when the expectation was for one rate rise a year," Broadbent told the BBC.
"The market has taken out a couple of the rate rises it had expected six months ago. I should say one quarter-point rate rise a year... I wouldn't describe that as particularly dramatic. We expect the path of interest rates, as and when they do go up, that rise to be limited and gradual."
Broadbent is a potential candidate to replace Mark Carney as the BoE's governor when Carney leaves in January 2020. Asked whether he was planning to apply for the job, Broadbent said: "I haven't decided yet."
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