Chancellor's economic council pushes back against further rate hikes - reports

investmentweek.co.uk:

Andy Haldane (pictured), former chief economist at the Bank of England, is seen as being one of the most dovish members of the council. Image: Bank of England

The seven-member council, which includes figures such as former BoE chief economist Andy Haldane and Karen Ward, has a majority that believes the central bank should hold back on its interest rate hikes, people familiar with the matter told Bloomberg.

At least four of the seven-member council, which was revealed in October last year, privately support a slowdown in hikes, people familiar with the matter said.

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This is apparently influencing top Treasury officials, who now believe that slowing inflation and other figures point towards a broader slowdown of the economy, with the UK's inflation level decreasingly sharply by the end of 2023.

According to the reports, some members of the council are concerned that the BoE may feel pressured to push interest rates higher than necessary due to perceptions that they were not fast enough to start tackling inflation, with one source describing this view as ‘near unanimous'.

Despite being the first major central bank to begin hiking in December 2021, inflation has been stickier in the UK than in other developed markets, and the BoE's combined hikes have totalled 490bps compared to the US Federal Reserve's 525bps since March 2022.

Some council members have still expressed openly split views on the subject. Ward, who is also chief market strategist, EMEA at JP Morgan Asset Management, said last month that the BoE «should not be blamed for doing its job».

«Ultimately, the Bank of England has no choice but to bring down demand,»she added.

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