Marijana No Comments

Bank of England holds interest rate at 0.75% as ‘downside risks’ increase

The Bank of England on Thursday held the headline UK interest rate at 0.75%.

The central bank delivered its June interest rate decision at 12pm on Thursday. The 9-person Monetary Policy Committee (MPC) voted unanimously to hold the bank borrowing rate at 0.75%. Analysts and economists had widely forecast this outcome.

The MPC said UK economic growth appears to have “weakened slightly in the first half of the year” and said “downside risks to growth have increased.”

“Globally, trade tensions have intensified,” the MPC said in a statement. “Domestically, the perceived likelihood of a no-deal Brexit has risen. Trade concerns have contributed to volatility in global equity prices and corporate bond spreads, as well as falls in industrial metals prices. Forward interest rates in major economies have fallen materially further.”

Pound falls on decision

The pound fell against the dollar and the euro in the immediate aftermath of the Bank’s decision, although not significantly.

The pound was down about 0.1% against the euro at €1.123 10 minutes after the decision, having traded at €1.125 just before the announcement. Sterling was up 0.4% against the dollar at $1.269 but had been as high as $1.272 earlier in the morning.

The drop-off came as investors judged that Thursday’s update meant a future interest hike from the Bank of England looked less likely.

The Bank of England and governor Mark Carney have consistently said they plan to gradually raise the UK interest rate.

The MPC said on Thursday that if the economy develops “broadly in line” with forecasts and there is a smooth Brexit, then “an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate.”

However, analyst and economists say the failure to resolve Brexit means the bank is unlikely to make any major changes this year.

“Despite a growing number of hawkish signals coming from the Monetary Policy Committee, in reality the Bank’s room for manoeuvre is limited until Brexit uncertainty clears,” Tej Parikh, chief economist at the Institute of Directors, said in a statement.

The MPC admitted on Thursday: “The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal.”

Brexit cloud hangs over the Bank

Despite the Bank’s signals about raising rates, Investors believe the Bank of England is more likely to cut interest rates than raise them, according to market data ahead of Thursday’s announcement.

The backdrop to Thursday’s decision was a mixed economic picture for the UK. Jobs and wage data has held up well so far in 2019, but GDP growth is sluggish and recent manufacturing data suggests it could remain that way.

The MPC said on Thursday that recent data has been “volatile, in large part due to Brexit-related effects on financial markets and businesses.”

However, the committee repeated the statement that its “response to Brexit, whatever form it takes, will not be automatic and could be in either direction.” Carney has in the past said that the Bank could raise interest rates in response to a no-deal Brexit, although economists and investors largely think he is bluffing.

Central banks load the ‘bazookas’

The Bank of England’s decision to hold rates steady came as other major central banks this week signalled intentions to loosen monetary policy.

European Central Bank chief Mario Draghi said earlier this week that more stimulus may be needed in the eurozone if conditions do not improve. The US Federal Reserve held its benchmark interest rate unchanged at 2.5% on Wednesday but signalled a future interest rate cut looks increasingly likely.

IMF head Christine Lagarde warned in January that “the world economy is growing more slowly than expected and risks are rising.” Conditions have not improved markedly since then, with key issues such as the US-China trade war and Brexit yet to be resolved.

Bank of England governor Mark Carney will give a speech at the annual Mansion House dinner in London on Thursday evening. Carney could give more details on his outlook for the UK economy and future rate movements.

By Oscar Williams-Grut

Source: Yahoo Finance UK

Marijana No Comments

What to expect from Bank of England’s interest rate decision

The Bank of England (BoE) is set to leave interest rates unchanged this week but will likely try to convince investors rate hikes are around the corner.

The BoE will on Thursday publish the minutes of the latest Monetary Policy Committee (MPC) meeting and the committee’s decision on interest rates. Analysts think the MPC will vote unanimously to kept the benchmark bank borrowing rate unchanged at 0.75%.

“We expect unchanged policy and for the minutes to maintain the current rhetoric of a gradual path of rate hikes,” Barclays’ senior UK economist Sree Kochugovindan said in a note sent to clients last Friday.

The Bank of England has repeatedly signalled that it wants to gradually raise the benchmark interest rate, which remains at a historic low. But economists, analysts, and investors think hikes are unlikely as long as Brexit remains unresolved and the UK’s economy remains lukewarm at best. Market prices indicate investors believe a rate cut is more likely than a hike.

As a result, Bank of England governor Mark Carney and his colleagues will have to signal in the MPC minutes and Thursday’s press conference that they do actually plan to hike rates if they don’t want markets to get a shock.

“We do not expect the BoE to move interest rates higher unless or until there is some positive resolution to the Brexit saga,” Nomura’s George Buckley wrote in a note to clients last week.

As well as Brexit uncertainty, Credit Suisse said economic “risks have turned to the downside” since the MPC’s last meeting. The investment bank cited recent worsening UK manufacturing data, as well as ongoing trade tensions between the US and China, both of which could hit economic growth. Barclays last week cut its forecast for UK GDP growth in 2019 from 1.2% to 1.1% on similar concerns.

Against this backdrop, the central bank looks more likely to cut rates than to raise them. Lower interest rates should help boost growth by encouraging borrowing and spending.

However, the Bank of England has consistently said it wants to gradually raise interest rates — not cut them further. Carney has even suggested he could raise rates if there is a no-deal Brexit, counter to conventional logic.

In order to keep this path open, the BoE will have to prepare the market for future hikes. It will likely do so by sounding a “hawkish” tone in the public comments of the committee. (In central banking, “doves” favour low interest rate policy, while “hawks” favour higher interest rates.)

“The MPC will have to issue fresh, dovish guidance in order to satisfy markets on Thursday, which now think the Committee is more likely to cut than raise Bank Rate within the next six months,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in a note to clients.

“But with clearer signs emerging that domestic price pressures are building, we expect the Committee to reiterate its commitment to ‘ongoing’ tightening and to repeat its May warning that markets’ expectations are out of line with reality.“

Even if Carney and his colleagues do strike a more “hawkish” tone, investors may remain out of step with the bank.

“Markets are pricing out any prospect of a rate hike from the BoE this year (amid a Fed-led collapse in global rate expectations),” Michael Ingram, the chief market analyst at WH Ireland, told Yahoo Finance UK. “So they can try and sound hawkish, but the market ain’t buying it.”

The Bank of England’s decision will come a day after the US Federal Reserve makes its latest call on interest rates. Investors believe the Fed will signal rate cuts later this year. This loosening of policy may undermine the BoE’s attempts to threaten future rate rises.

Aside from the tone of comments from MPC members, investors will be watching the balance of voting on the nine-member committee closely. If even one member dissents, it could send shockwaves through the market as investors shift bets towards a rate hike later this year.

“A couple of hawkish comments from Haldane and Saunders have made that meeting a little more interesting than it might have been,” Allan Monks, JPMorgan’s UK economist, said in a note to clients.

“But we expect there will be no dissents at next week’s meeting, with the BoE instead using its communications to push back against current market expectations for cuts.”

By Oscar Williams-Grut

Source: Yahoo Finance UK

Marijana No Comments

Bank to hold rates steady as growth falters

Bank of England policymakers are set to keep interest rates on hold again this week, as economic growth slows sharply after a stock-building boost at the start of 2019.

The Monetary Policy Committee (MPC) is seen keeping rates at 0.75% once more in Thursday’s noon decision, which comes after the latest official figures showed the economy shrank by a worse-than-feared 0.4% in April.

But MPC members have been banging the drum for the need to raise rates if the Government secures a smooth Brexit – which is the scenario on which it has based all its forecasts.

Ben Broadbent, deputy governor for monetary policy, and fellow MPC member Michael Saunders, told MPs on the Treasury Select Committee that financial markets are not pencilling in rate hikes soon enough.

This follows similar comments from Bank governor Mark Carney at the May inflation report, when he said investors were wrong to price in just one rise over the next three years.

Inflation has also moved up from recent lows, increasing to 2.1% in April against 1.9% in March.

But economists believe the Bank will sit on its hands until the Brexit outcome is clear.

Howard Archer, chief economic adviser to the EY Item Club, said: “April’s sharp dip in GDP and soft May surveys reinforces belief that the Bank of England will maintain a cautious “wait and see” approach on interest rates amid heightened economic, political and Brexit uncertainties.

“We believe the Bank of England is likely to keep interest rates at 0.75% through 2019.”

Philip Shaw at Investec added: “With no urgency to tighten policy again, the committee would probably want to avoid making a policy move now which it might well have to reverse relatively soon afterwards.”

In May, the Bank upped its forecasts for UK growth to 1.5% this year, up from the paltry 1.2% predicted in February thanks largely to a more stable global economic outlook.

It also increased its gross domestic product (GDP) growth outlook to 1.6% in 2020 and 2.1% in 2021, up from 1.5% and 1.9% previously.

Growth accelerated to 0.5% in the first quarter thanks to stockbuilding ahead of the original March 29 Brexit deadline.

But the monthly GDP figures for April confirmed expectations that this would quickly unwind in the second quarter.

A 24% slump in car production was largely behind the April contraction, while the services sector recorded its lowest three-month growth since this time last year, climbing just 0.2%.

Recent purchasing managers index (PMI) surveys have also pointed to a mixed May, with output contracting across manufacturing and construction, but activity edging up across the services sector.

And the global economic outlook has also become “murkier”, according to Mr Shaw.

He said: “Our central view is that the UK leaves the EU at the end of March 2020 and that the MPC eventually raises rates again the following November.

“We cannot pretend that there is any degree of inevitability here, bearing in mind the all-enveloping dark cloud of uncertainty.”

By Holly Williams

Source: Yahoo Finance UK

Marijana No Comments

Bank of England chief economist says UK rate rise is on the horizon

The Bank of England’s chief economist, Andy Haldane, has said the UK is nearing the time it will need to raise interest rates to keep inflation pressures in check.

Haldane wrote in The Sun on Saturday that “a lost decade” of wage growth is coming to an end ahead of “steady if not spectacular” growth in 2019.

“For me personally, the time is nearing when a small rise in rates would be prudent to nip any inflationary risks in the bud,” he said.

“Acting early with a rate rise acts as insurance against the need for faster and larger rises in interest rates in future.”

Last year, Haldane was one of two current members on the Monetary Policy Committee that voted for a rate raise ahead of the unanimous decision to increase interest from 0.5 per cent to 0.75 per cent.

He reaffirmed the Bank of England’s desire to raise rates in a gradual way, but financial markets believe rates are more likely to be cut than increased in the next year amid Brexit uncertainty.

The potential for further delays to the deal or a no deal scenario are key causes for concern, while the US-China trade war has also softened the global economy.

Markets also expect the US Federal Reserve to cut rates two or three times this year.

Haldane said it would be arrogant to bet against market predictions, but told The Sun that inflation pressures would probably increase once the Brexit impasse was resolve.

“With spending by both households and companies then picking up, that could put at risk the Bank of England’s 2% inflation target – with upward pressure on prices eating into pay and savings,” he wrote.

“Those are the circumstances in which the Bank’s Monetary Policy Committee, on which I sit, would need to consider the case for a further modest rise in interest rates.”

By Michael Searles

Source: City AM

Marijana No Comments

BoE’s Haldane says time nearing for UK rate rise

The Bank of England is approaching the time when it will need to raise interest rates again to keep inflation pressures in check, its chief economist Andy Haldane wrote in an article which pushes back strongly against recent market sentiment.

Britain is set for “steady if not spectacular” economic expansion in 2019 and a “lost decade” for wage growth is coming to an end, Haldane wrote in an opinion piece for Saturday’s edition of the Sun newspaper.

“For me personally, the time is nearing when a small rise in rates would be prudent to nip any inflationary risks in the bud,” he said. “Acting early with a rate rise acts as insurance against the need for faster and larger rises in interest rates in future.”

Haldane was one of two current members of the BoE’s Monetary Policy Committee to vote for a rate rise at the meeting prior to last August’s unanimous decision to raise rates to 0.75% from 0.5%, the BoE’s second increase since the 2008 financial crisis.

The BoE has long said it intends to raise interest rates in a limited and gradual way – language which Haldane stuck to – but financial markets now think the BoE is more likely to cut rates than to raise them over the next 12 months.

Britain did not leave the European Union on the long-promised date of March 29, and it is possible departure could be delayed past the new date of Oct. 31 – or that Prime Minister Theresa May’s successor could push ahead with a disruptive no-deal Brexit on that date.

The global economy has softened, too, due to trade conflict between the United States and China, and markets now expect the U.S. Federal Reserve to cut rates two or three times this year.

The BoE has sought to distinguish Britain’s situation from the United States, and last month Governor Mark Carney said some investors were wrong to assume the BoE only intended to raise rates once over the next three years.

Haldane had appeared more circumspect, telling reporters that it would be arrogant to bet against markets.

But in Saturday’s article – which did not directly address recent market moves – he said inflation pressures were likely to mount once Brexit uncertainty lifted and businesses restarted postponed investment projects.

“With spending by both households and companies then picking up, that could put at risk the Bank of England’s 2% inflation target – with upward pressure on prices eating into pay and savings,” he wrote.

“Those are the circumstances in which the Bank’s Monetary Policy Committee, on which I sit, would need to consider the case for a further modest rise in interest rates.”

Reporting by David Milliken; Editing by Leslie Adler

Source: UK Reuters

Marijana No Comments

Pound gains on dollar as Carney says interest rate hikes still on table

BANK of England governor Mark Carney helped keep the pound above 1.27 dollars for a third day running on Thursday, as he said interest rate hikes were still on the table.

The pound was higher against the US dollar, climbing 0.11% to 1.270, following Mr Carney’s comments in the bank’s annual report.

Fiona Cincotta, senior market analyst at City Index, said: “Today’s weaker dollar was lending a hand to the pound, as did Mark Carney. The BoE Governor suggesting that the UK could still raise rates if the economy performs as expected was some welcome good news for the Brexit battered pound.”

But sterling was 0.45% lower against the euro at 1.125 as the common currency surged, boosted by a more positive than expected statement from the European Central Bank (ECB).

This impacted European markets, with the German Dax going into the close 0.23% lower while the French Cac was down 0.36%.

In London, the FTSE 100 was up by 39.63 points, or 0.55%, at 7,259.85.

Under-pressure city heavyweight Neil Woodford was dealt another major blow after St James’s Place ended its £3.5 billion association with his firm.

Shares in the FTSE 100 asset manager were down 5p to 1,037p.

Insurance giant Aviva announced plans to axe around 1,800 jobs in the next three years in a bid to save £300 million a year.

Investors reacted positively to the news, pushing shares up 3p to 413.6p.

Online car seller and trading platform Auto Trader continued its impressive growth with rising revenue and profit despite falling car sales throughout the sector, the company revealed.

Shares dipped 2.4p to close at 585p.

Go-Ahead, the transport company behind Govia Thameslink Railway (GTR), revealed strong growth across all three of its divisions.

Its shares surged on the news, jumping 197p to 2,080p.

Facilities management provider Mitie posted a better-than-expected 6% rise in annual underlying earnings to £88.2 million for the year to March 31.

Shares rose 7p to 146.5p, as the result came in higher than feared after Mitie had warned over earnings and falling orders in March.

Entertainment One shares soared after the Peppa Pig maker denied reports that its president is set to leave the firm.

Shares spiked by almost 16%, climbing 55.4p to 405.4p, after the TV and film production business reassured investors that Mark Gordon, president and chief content officer, will remain at the firm.

Engine maker Rolls-Royce announced it had offloaded a £4.6 billion chunk of its pension scheme covering 33,000 members to Legal & General, in the biggest deal of its kind in the UK.

Shares were up 11p at 894p.

Oil prices were little changed, having slumped in the previous session when the Energy Information Administration update showed that US oil stockpiles have significantly jumped.

A barrel of Brent Crude oil was trading at $60.46, down 0.13%.

The biggest risers on the FTSE 100 were Imperial Brands up 112p to 2,073p, British American Tobacco up 87p to 2,915.5p, United Utilities Group up 22.4p to 829.6p and Severn Trent up 47p to 2,046p.

The biggest fallers on the FTSE 100 were Taylor Wimpey down 12.65p to 156.5p, Kingfisher down 10.5p to 207.6p, Hargreaves Lansdown down 81.5p to 1,900p and Vodafone Group down 5.12p to 127.98p.

Source: Herald Scotland

Marijana No Comments

Mortgage approvals tick up in April

Mortgage approvals — a leading indicator of mortgage activity and future lending — ticked up in April, according to new data from the Bank of England.

The BoE’s Money and Credit report, published today (May 31), showed the number of mortgage approvals for house purchase rose to about 66,300 in April — up slightly from the 62,559 measured for March.

Mortgage approvals show how many new loans banks have approved and that could be drawn, so capture the early stages of taking out secured lending against a property.

Therefore, they are a key indicator of current market activity and potential future lending.

However the number of approvals for remortgaging was broadly unchanged at around 49,400.

This is a turn in the market, as data released by UK Finance last month showed the number of people getting approved to remortgage increased by 11.1 per cent year-on-year in March and the number of people opting to remortgage is expected to reach a peak later this year.

The bank’s data also showed net mortgage borrowing remained strong for the second month in a row, totalling £4.3bn in April compared with the six-month average of £3.8bn.

The findings showed the annual growth rate of mortgage lending remained unchanged at 3.3 per cent, consistent with the level the market has seen since August last year.

Andrew Montlake, director of mortgage broker, Coreco, said: “Today’s buyer is spoilt rotten. Mortgage rates are obscenely low and, in the majority of cases, buyers are calling all the shots.”

Mr Montlake added that while the passing of the March Brexit deadline will have spurred some into action in April, a broader Brexit apathy was becoming stronger by the day.

He said: “April was the month when activity levels for brokers started to pick up and this was confirmed in the Bank’s latest data.

“People are increasingly of the view that, even if prices fall in the short-term following a potential no-deal Brexit, in the medium-term they will reap the benefits.”

He went on to say that while remortgages had been driving activity for some time, there had been a definitive pick-up in purchases over the past two months.

Richard Pike, marketing director at lending software firm Phoebus, agreed that remortgaging had played a big part in holding up the mortgage market over the past couple of years but said today’s figures showed it was levelling out.

He said: “The trend of people taking advantage of the stamp duty relief to move their current deals will have come to an end and we could see another uptick in the remortgaging figures next month.

“With household debt rising consistently, remortgaging to a better, less expensive deal is one quick way to reduce household spend and even consolidate some debt.

“The number of approvals for house purchase increased, which is a good sign for the whole market. As lenders offer better and better rates and deals, it is a good time for people to move up, or down, the ladder.”

By Imogen Tew

Source: FT Adviser

Marijana No Comments

Interest rates would be hiked if Britain achieves orderly Brexit, says Bank of England

Deputy governor of the Bank of England Dave Ramsden has said interest rates would need to be hiked if Britain leaves the European Union in an orderly manner with a transition deal.

Ramsden, speaking in Inverness, Scotland, said although he expected growth to pick up if a deal is reached, he is more pessimistic about UK economic growth than his colleagues on the Bank’s monetary policy committee (MPC).

His speech echoed the position of the MPC on interest rates, which signalled at its last announcement earlier this month that “ongoing tightening of monetary policy” was appropriate, with governor Mark Carney saying he thought the markets were not accurately factoring in rates rises.

Ramsden, who has a slim chance of replacing Carney when he steps down in January 2020, said today: “If we get a smooth Brexit with a transition deal… I expect growth to pick up, leading to excess demand and building domestic inflationary pressure, so that further monetary tightening is appropriate to maintain monetary stability.”

He said he was “a little more pessimistic on GDP growth than my colleagues on the MPC”, saying he saw “more downside risks to productivity” and was “less optimistic that investment will recover as much as it does” in the MPC’s latest forecast.

The deputy governor warned that “unarguably the biggest risk to the UK economy and UK financial stability, remains that of a Brexit outcome of no deal and no transition”.

Britain’s departure date from the bloc was extended from 29 March to 31 October by Brussels and Prime Minister Theresa May in the hope of getting a deal through parliament.

However, after three failures to pass her agreement May announced her resignation. The contest to replace her as Conservative leader and PM is likely to see a Brexiter installed who may take Britain out of the EU without a deal.

“That would have large negative economic effects, both in the Bank’s view and in the views of the businesses we talk to up and down the country,” he said.

Yet he said the financial system would be resilient even to a “worst case disorderly scenario”, meaning “banks would be able to continue to lend to households and businesses in a way they couldn’t at the time of the financial crisis”.

Ramsden said the Bank’s response to such an event would depend on its exact shape. “There are scenarios where the balance of those factors would mean looser monetary policy was appropriate, and other scenarios where it would be appropriate to tighten,” he said.

By Harry Robertson

Source: City AM

Marijana No Comments

Bank of England says it is watching mortgage price war ‘like a hawk’

Regulators are watching a price war in mortgages “like a hawk” and may need to impose stricter minimum capital requirements on lenders, Bank of England Deputy Governor Sam Woods said on Friday.

The price war over the past two years may be good news for consumers wanting to buy their first home, but it was less good for a bank or building society concentrated in mortgages, Woods told the Building Societies Association.

High loan-to-value ratios and higher loan-to-income home loans can be well captured by the BoE’s capital requirements.

“But we should be watching them like a hawk,” Woods said.

Falling capital levels have been seen at lenders who use their own computer models to work out the riskiness of loans on their books and therefore how much capital to hold.

“The amount of capital being set aside to cover mortgages has been falling,” Woods said.

The BoE’s supervisors were making strenuous efforts to check on how models are being used.

“Still, I think we should approach this trend with a very sceptical eye and need to consider whether there is a case to impose more floors in firms’ models, particularly given the current stretch in some measures of house price valuation,” Woods said

(Graphic – BOE high loan to value chart, tmsnrt.rs/2X3xkZl)

RING FENCE FACTOR

Woods’ warning comes after the Bank forced Metro Bank to correct how much capital it was setting aside to cover mortgages after under-reporting the risk from its loan book.

Metro raised 375 million pounds to bolster its capital buffers earlier this month.

Tesco Bank said this week it was quitting home lending due to tough competition, and Nationwide Building Society its measure of underlying profitability fell in the year to April 4.

Credit ratings agency Fitch has said that rules requiring big banks to “ring fence” their retail arms with capital have led to increased competition as lenders seek to boost revenues.

Europe’s biggest bank HSBC has renewed its focus on home loans to boost revenue in its ring-fenced arm.

Asked if ring-fencing was to blame for the price war, Woods said: “Everyone involved agrees to some extent that that has been a factor in the intensification of pressure in the mortgage market.”

“We don’t think it’s the dominant factor. We think that the effect so far is manageable,” Woods said, adding that his staff were seeking to measure the impact of ring-fencing.

The regulatory system is also unable to properly capture risks from margin loans, or loans are granted using shares held by the borrower as collateral, Woods said.

Banks in London lost more than a billion euros in a single deal in 2017, Woods said.

Britain’s departure from the European Union could give Britain more leeway to adapt rules that are currently written in Brussels.

“My view is that a simpler system of regulation for smaller firms would be a good thing,” Woods said.

Reporting by Huw Jones

Source: UK Reuters

Marijana No Comments

May Quitting Throws Bank of England Governor Race Into Unknown

A new prime minister — and the new chancellor of the exchequer that might accompany them — could have very different priorities from May and Philip Hammond, potentially opening the door for a different slate of candidates for the top BOE job. The finance chief is the one formally responsible for making the appointment.

The prime minister’s decision also ups the uncertainty faced by the U.K., which Hammond has previously acknowledged could deter candidates. Potential governors don’t have long to make up their mind. The closing date for applying for the BOE role is June 5 — two days before May will stand down — with a decision due in October. A new prime minister is likely to be in place by the end of July.

“Not only do we not know who’s in the running and who is actually possible, but we also don’t know who is going to be making that choice — or, to be honest, even which party may be making the decision,” said George Buckley, chief U.K. economist at Nomura in London.

If a Brexiteer succeeds May, it could lead to an awkward end to the tenure of Mark Carney, who is set to leave the role in January. In the meantime, the change of leadership leaves the Canadian facing a tricky policy dilemma of whether he should keep preparing the ground for the interest-rate hikes he says are needed while further uncertainty stalks the economy.

Carney has come under frequent criticism from anti-European Union politicians, many of whom consider him to have been overly gloomy on Britain’s prospects. While Hammond has been a more sympathetic ear in the Treasury, the relationship could be more strained if one of Carney’s prominent critics takes the role.

In a Bloomberg TV interview Friday, Roger Bootle, chairman of Capital Economics and a member of pro-Brexit group Economists for Free Trade, said that a new chancellor was almost certain.

“I would be very surprised if any new prime minister stuck with the current one,” he said.

While a Brexiteer PM might add some unexpected names in the race to replace Carney, a more orthodox candidate can’t be ruled out — especially if they are looking for a safer choice to burnish their economic credentials.

Jacob Rees-Mogg, an arch critic of Carney, suggested last year that Andrew Bailey, the chief executive officer of the Financial Conduct Authority, and BOE Chief Economist Andy Haldane — two men regularly cited as potential replacements — could take the job.

If front-runner Boris Johnson prevails, former adviser and pro-Brexit economist Gerard Lyons could be a potential choice for the central bank.

Hammond said the next BOE governor should have international status, prompting speculation that former Reserve Bank of India chief Raghuram Rajan could be in the frame. May, a former BOE economist, has also encouraged women to apply for the role.

Of course, the decision might not even be in the gift of the Conservative Party. If the leader calls a general election to buttress their position, Labour could seize power for the first time in almost a decade. The opposition party has explored proposals to change the BOE’s mandate, including targets for house-price inflation, productivity and climate change.

By David Goodman and Lucy Meakin

Source: Yahoo Finance UK