BoE: Expect only two votes for a rate hike at this week's meeting - HSBC

Analysts at HSBC continue to expect only two votes for a rate hike at this week's meeting (from Ian McCafferty and Michael Saunders) while they expect the other members to remain on hold.

Key Quotes

“Sir Dave Ramsden has been appointed Deputy Governor for Markets and Banking, and MPC member. With last month's appointment of Prof Silvana Tenreyro, all 9 seats on the MPC are now filled.”

“Implications

• Sir Dave Ramsden is no stranger to the MPC. As part of his role at the Treasury he has, for several years, sat in on MPC meetings as an official observer. This includes the most recent meeting on 14 June. It is therefore likely that Mr Ramsden will not need much time to get up to speed with the policy debate.
• Given his public position of neutrality at the Treasury, it is hard to tell where Sir Dave lies on the dove-hawk spectrum. But he has been at the heart of the machinery of UK economic policymaking in recent years. This has been built around fiscal consolidation and ultra-loose monetary policy. We doubt whether Sir Dave will depart too stridently from this broad monetary policy stance. Moreover, he oversaw the Treasury's Brexit analysis ahead of last year's referendum, which was hardly upbeat about the near-term oulook.  So we do not think Sir Dave will dissent from the majority 'on hold' MPC view in the near future.
• Beyond his role as an MPC member, the role of Deputy Governor for markets, while relatively new, is an important one.  Sir Dave will sit on all of the BoE’s main policy committees, including the MPC, FPC, Prudential Regulation Committee and the BoE’s Court (Board). One specific responsibility of the job is the management of the Bank's balance sheet, including, eventually, the reduction in the GBP435bn stock of assets held under the QE programme. We note, however, that the MPC has said previously that it does not plan to begin such a reduction until Bank rate reaches around 2%. 
• Sir Dave’s move to the BoE following such a long stint at the Treasury could strengthen links between the two institutions as the UK faces the economic challenge of Brexit.  While this should be useful, rightly or wrongly it could raise questions about BoE independence.  Overall, the appointment has little impact on our near-term monetary policy expectations.”