FOR seven straight months Andrew Sentance stood alone in the Bank of England’s rate setting committee – the only member proposing an increase in the Bank’s lending rate.
But this month Sentance convinced one of his colleagues to jump off the fence.
“The surprise was not so much that someone joined Andrew Sentence, it was the fact that it was Martin Weale,” commented Alan Clarke of BNP Paribas.
“Most would have assumed that Weale was of a more dovish persuasion,” Clarke said.
With inflation spiralling upwards, there was an air of inevitability to the change in voting figures.
Consumer price index (CPI) inflation hit 3.7 per cent in December, and Bank governor Mervyn King admitted it will reach “four to five per cent” in the coming months.
But while some suspected that a member such as Spencer Dale might take the plunge towards stronger rates, few thought Sentance would be joined by Weale -- a man who, within the last six months, said there was a “real danger” of a double dip recession.
Back in August, Weale pledged he would not be voting for an interest rate hike “any time soon.”
“Being a new member, he doesn’t have much of a voting record for us to judge,” said Howard Archer of IHS Global Insight, “but he seemed to be slightly on the dovish side.”
But not everyone was surprised. The dove-hawk split is too much of a generalisation, said Investec’s Philip Shaw. “At the National Institute of Economic and Social Research he has called for rate rises at early times before,” Shaw said.
Most of the Bank’s interest rate setters have been extremely loath to nail their colours to the mast, during uncertain economic times. New member Weale appears somewhat more intrepid.