Pound slides on Bank of England deputy governor Ben Broadbent saying he's 'not ready' to raise interest rates

Rebecca Smith
Broadbent and governor Mark Carney both voted to keep interest rates at record lows in June
Broadbent and governor Mark Carney both voted to keep interest rates at record lows in June (Source: Getty)

The pound dipped this morning after the deputy governor of the Bank of England said he's "not ready" to raise interest rates yet.

In an interview with the Scottish Press and Journal paper, Broadbent gave the first signal of where his thoughts are after three members of the Monetary Policy Committee voted in favour of a rate hike in June.

Read more: Bank of England's Ben Broadbent sounds Brexit warning on UK trade

"In my opinion, it is a bit tricky at the moment to make a decision," Broadbent said. "I am not ready to do it yet."

He said business sentiment was at the heart of his assessment of the current outlook.

The comments caused sterling to edge down against the dollar to $1.2821. Markets had been waiting for any clues as to whether Broadbent would back governor Mark Carney and the doves, or adopt a more hawkish tone and back an interest rate rise.

The pound had edged up in anticipation of a speech the deputy governor made yesterday in Aberdeen, but he focused on globalisation and sounded a fresh warning over UK trade after Brexit.

But in today's interview, Broadbent gave more insight, saying there were currently too many "imponderables" in the economy. His stance has been keenly watched as the deputy governor is considered a key swing voter on the rate-setting committee.

Broadbent cited the "mood of business" as the critical factor in his thinking, saying: "If you look at the past six to 12 months, economic growth has been okay and the employment rate good. Unemployment has drifted down a little... and inflation higher. There is reason to see the committee moving in that direction [higher interest rates] - but there are still a lot of imponderables."

The Bank of England's chief economist Andy Haldane gave a signal the tide was turning last month, saying he was in favour of a rate hike at some point this year, though the governor has been in favour of keeping rates at record lows.

The next MPC meeting will be on the 3 August.

Read more: UK economy can take a rate hike to battle inflation says BoE hawk

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