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Nickel's Replacement

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Uber-dove Stephen Nickels replacement David Blanchflower "has open mind on interest rates"

LONDON (Reuters) - New Bank of England Monetary Policy Committee member David Blanchflower said he had no pre-set view on which way interest rates should go as there were arguments on both sides.

In an hearing with the Treasury Select Committee, the U.S. academic who takes up his post on the MPC on June 1 said he also was not persuaded one way or the other on the debate within the committee on the size of the output gap.

Asked which way he would have voted in May, he said: "At this point I don't think I could say where I go. I'm a particularly strong data reader. And I think it's a judgement call."

"So I think you need to look at the data. I saw some of it. I'm going to keep an open mind on it and you could see arguments in all directions."

Blanchflower replaces Nickell who had been the sole voice calling for lower interest rates since December. The MPC was split three ways at its meeting this month with Nickell repeating his call for a cut, David Walton voting for a hike and the six remaining members wanting to keep rates at 4.5 percent.

The Treasury has yet to announce a replacement for Richard Lambert to bring the MPC back up to nine members.

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I'm surprised this news hasn't received much of a reaction here on HPC. The BBC report (quite balanced for a change) has an interesting quote from Prof Blanchflower:

Bank appointee quizzed on rates

Prof Blanchflower did admit to MPs that he was "concerned enough" about inflation to have "started to work on the data".

"We need to focus on inflation. We have a 2% target for inflation. There's going to be random noise in that number, I'm going to focus on that," he said.

"We haven't seen a push on inflation and that's a surprise," Prof Blanchflower continued, citing the rise in oil prices and the fact that interest rates had been relatively flat.

He sounds like a man who won't be afraid to raise those IRs as inflation takes off.

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He sounds like a man who won't be afraid to raise those IRs as inflation takes off.

He couldn't be any more dovish than Nickell, could he? So, the replacement of Nickell is a hawkish event.


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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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