The UK Treasury is preparing to name a new member to the Bank of England panel that sets interest rates, a person familiar with the government’s thinking said, in a move that may impact the fight against inflation.
(Bloomberg) — The UK Treasury is preparing to name a new member to the Bank of England panel that sets interest rates, a person familiar with the government’s thinking said, in a move that may impact the fight against inflation.
The Treasury will announce a successor to Silvana Tenreyro, whose second three-year term ends on July 4, as soon as this week, according to the person, who asked not to be named because the considerations remain private.
Tenreyro, an external member, is one of two doves on the nine-member Monetary Policy Committee who believe borrowing costs at 4.25% are already high enough to restrain both the economy and inflation. She has two more meetings, in May and June, before her term expires.
Potential contenders include Sarah Hewin, head of research for Europe and the Americas at Standard Chartered, and Jumana Saleheen, chief economist at Vanguard Asset Management. Both Hewin and Saleheen declined to comment.
The Treasury, which makes external MPC appointments, is keen to replace Tenryro with another woman to maintain the gender balance of six women and three men. It also wants an economist with business or markets experience as a counterweight to the academics on the panel.
After 11 consecutive hikes, from 0.1% in December 2021, the BOE is considering when to draw to a close its quickest series of rate hikes in three decades. Concerns remain about underlying inflationary pressures in the UK have led some on the committee, especially Catherine Mann, to warn that rates may need to be tightened again.
Consumer price inflation surprised by accelerating to 10.4% in February instead of declining as the BOE had expected. The UK jobs market remains tight, with regular private sector pay still increasing 7%, well above the BOE’s 2% inflation target.
Tenreyro’s successor could shift the balance of the committee at future meetings as rate decisions become more finely balanced. At the last meeting, seven members voted to raise rates a quarter point. Tenreyro and Swati Dhingra voted to hold at 4%.
The last MPC member to leave, Michael Saunders, was an inflation hawk, voting more often than others for higher rates. He was replaced by Dhingra, who is the most dovish on the committee alongside Tenreyro.
(Updates with previous rate decision in eighth paragraph. An earlier version of the story corrected the level of borrowing costs in the third paragraph.)
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