Bank of England gets a new member as traders eye an eventual rate hike
- The Bank of England's new Deputy Governor for Markets David Ramsden is expected to stick to a dovish line for the bank
- Ramsden is also chief economic advisor to the U.K. treasury
David Ramsden joined the Bank of England (BOE) Monday as deputy governor for markets, with analysts expecting the economist to stick to a dovish line for the bank and not opt for immediate rate hikes.
He will also be a member of the BOE's Monetary Policy Committee (MPC), the Financial Policy Committee, the Prudential Regulation Committee and the Court of the Bank of England.
Ramsden, who was knighted in 2015 on the back of his work in economic policy, is joining from the U.K.'s Treasury Department where he has served since 1988 and as chief economic advisor since 2008.
During his tenure there, he most notably spearheaded work on whether the U.K. should join the euro from 1999 to 2003. The conclusion was that joining the euro would not be in the U.K.'s economic interests.
In 2016 and into the run-up to the Brexit referendum, the Treasury came under fire by Euroskeptics for publishing forecasts that were perceived to be too gloomy. The reports looked at the long-term economic impact of the U.K. leaving the EU, estimating that, in an adverse shock scenario, it would lower output by more than 6 percent within 2 years.
On the MPC committee, Ramsden will be filling the post vacated by Charlotte Hogg, who stepped down in March after failing to disclose her brother's job at Barclays as a potential conflict of interest. This takes the committee back up to nine members.
Ramsden's appointment comes at an interesting time for the MPC. Inflation touched a four-year high this year, prompting two members of the committee (Michael Saunders and Ian McCafferty) to vote for a 25-basis point rate hike at its August meeting.
The BOE Governor, Mark Carney, has however stuck to a more dovish line, warning about the impact that Brexit is having on business investment and pay negotiations. In a speech in August, he said: "Monetary policy cannot prevent the weaker real incomes likely to accompany the move to new trading arrangements with the EU."
According to analysts, Ramsden is unlikely to join the dissenters in voting for a hike at his first meeting on September 14. Rather, the expectation is that he will join the dovish end of the spectrum given the Treasury's warnings about the consequences of Brexit. The market is pricing in the first hike to occur in June 2019.