Andrew Haldane, the Bank of England’s big thinker on financial stability, takes up a new role setting interest rates as the central bank’s chief economist in June but his views on monetary policy are largely unknown.
Mr. Haldane appeared before lawmakers Wednesday to discuss his appointment and gave a few clues to where he stands on some of the hot issues his colleagues are grappling with.
The bottom line is he either didn’t want to give too much away or his views align pretty closely with the center ground, at least right now.
Much like the Federal Reserve, the nine-member Monetary Policy Committee at the BOE has been zooming in on measures of spare capacity in the labor market to judge when to start raising interest rates to head off inflation.
Officials led by Gov. Mark Carney say they want to see a big chunk of that slack used up before they’ll consider tightening policy.
There are already signs the MPC is a divided over just how much slack there is. The panel has said collectively that its best guess is that it’s equivalent to 1% to 1.5% of annual output.
Mr. Carney has said he reckons the true figure might be a bit north of that; Martin Weale, another rate-setter, has said he thinks there might be less.
In a written statement, Mr. Haldane told lawmakers that 1% to 1.5% range seems a reasonable estimate of economy-wide slack, a sign he’s broadly in agreement with the MPC majority.
In verbal testimony he pointed to underemployment—the idea that extra slack exists in the labor market because people aren’t working as many hours as they would like—as an important source of spare capacity, which also ties in with what other MPC members have been saying.
Mr. Haldane gained a reputation as an original and independently-minded thinker on financial and regulatory issues and assured lawmakers he intends to chart a similar course as a rate-setter.
As chief economist he will be spearheading the BOE’s economic research, which Mr. Carney wants to look closely at the interplay between monetary and financial policy.
Mr. Haldane stressed the role of financial and international factors in explaining the dynamics of the U.K. economy, a sign that these wider issues are already shaping his thinking about monetary policy.
Asked to point to risks to the recovery, he listed a slowdown in China and an intensification of investors hunt for riskier, higher-yielding assets as potential problems.
He also sounded a warning on the U.K. housing market, saying any deterioration in lending standards could burden households with hard-to-service debts and ultimately hurt growth.
Real-estate prices in parts of the U.K. are rising fast, stoking concern over a possible bubble. Spencer Dale, Mr. Haldane’s successor as financial stability director, was also giving evidence Wednesday. He too cited the housing market as a big risk for the economy.
wsj.com
Mr. Haldane appeared before lawmakers Wednesday to discuss his appointment and gave a few clues to where he stands on some of the hot issues his colleagues are grappling with.
The bottom line is he either didn’t want to give too much away or his views align pretty closely with the center ground, at least right now.
Much like the Federal Reserve, the nine-member Monetary Policy Committee at the BOE has been zooming in on measures of spare capacity in the labor market to judge when to start raising interest rates to head off inflation.
Officials led by Gov. Mark Carney say they want to see a big chunk of that slack used up before they’ll consider tightening policy.
There are already signs the MPC is a divided over just how much slack there is. The panel has said collectively that its best guess is that it’s equivalent to 1% to 1.5% of annual output.
Mr. Carney has said he reckons the true figure might be a bit north of that; Martin Weale, another rate-setter, has said he thinks there might be less.
In a written statement, Mr. Haldane told lawmakers that 1% to 1.5% range seems a reasonable estimate of economy-wide slack, a sign he’s broadly in agreement with the MPC majority.
In verbal testimony he pointed to underemployment—the idea that extra slack exists in the labor market because people aren’t working as many hours as they would like—as an important source of spare capacity, which also ties in with what other MPC members have been saying.
Mr. Haldane gained a reputation as an original and independently-minded thinker on financial and regulatory issues and assured lawmakers he intends to chart a similar course as a rate-setter.
As chief economist he will be spearheading the BOE’s economic research, which Mr. Carney wants to look closely at the interplay between monetary and financial policy.
Mr. Haldane stressed the role of financial and international factors in explaining the dynamics of the U.K. economy, a sign that these wider issues are already shaping his thinking about monetary policy.
Asked to point to risks to the recovery, he listed a slowdown in China and an intensification of investors hunt for riskier, higher-yielding assets as potential problems.
He also sounded a warning on the U.K. housing market, saying any deterioration in lending standards could burden households with hard-to-service debts and ultimately hurt growth.
Real-estate prices in parts of the U.K. are rising fast, stoking concern over a possible bubble. Spencer Dale, Mr. Haldane’s successor as financial stability director, was also giving evidence Wednesday. He too cited the housing market as a big risk for the economy.
wsj.com
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