'Too much focus' on rate hike: BoE's Broadbent
The Bank of England would never give "time-specific" guidance on the U.K's first interest rate hike, Ben Broadbent, Bank of England monetary policy committee member -- and rumored leading contender for the deputy governorship -- told CNBC.
Broadbent told CNBC that there is "too much focus" on the interest rate hike amid speculation that the central bank could raise rates in the first half of 2015.
"We have never given, would not want to give, and are not giving time-specific guidance about when this happens. I might also say that I think there's too much focus on this particular date," Broadbent told CNBC.
Improving economic data in the U.K. since last year has increased expectations the Bank of England will look to raise its main interest rate. This measure is a benchmark for mortgages and savers all over the U.K. and was originally tied to the unemployment rate.
The U.K.'s official statistics office on Wednesday confirmed the country's gross domestic product rose 0.7 percent in the last three months of 2013 from the previous quarter, while business investment picked up sharply in the same period.
Bank of England Governor Mark Carney unveiled the "next phase" of his forward guidance in February after a sharp fall in jobless numbers took the central bank by surprise. In a surprise to some analysts, Carney's "second phase" of forward guidance did not link a rate hike to any specific indicators.
Instead, he said the bank's monetary policy committee (MPC) would be "monitoring a broad range of indicators" including labor market participation, average hours worked, productivity, and wages. The bank will also publish forecasts of 18 more economic indicators for the first time.
Broadbent said people are focused on the near-term effect of an interest rate hike, but what matters is the longer-term view.
"As a borrower, as a potential investor, a business person trying to decide whether to expand his or her firm, you'll be thinking about interest rates over the next several years. The precise point at which interest rates happen to go from 0.5 to whatever it is'really doesn't have much bearing on the average interest rate over the next five years," Broadbent told CNBC.
The forthcoming interest rate hike has become a political issue in the U.K. with politicians fretting about how the country would react to the first rise since 2009, which could hit mortgages ahead of the elections in May 2015.
Bank of England governor Mark Carney has come under fire for his flagship forward guidance policy and not making it clear when interest rates could rise. But Broadbent defended his boss, saying that it would be "irresponsible" for the MPC to nail down a specific date for the rate hike.
"You can't say anything is inevitable'it is the job of monetary policy to react to things. Stuff happens and our job is to react, not rigidly to set some profile indefinitely out for interest rates. That would clearly be the wrong thing to do," he said.
Next deputy governor?
Meanwhile, the deputy governor of the Bank of England Charlie Bean is set to retire in June.
Broadbent refused to be drawn over whether he was a frontrunner for the job or who will replace Bean.
"Regrettably Charlie is leaving in the summer, best thing possible would be if he were to stay'and the government will presumably announce a successor sometime before then. I don't think it's a matter of public interest who has or has not applied for that job," Broadbent told CNBC.
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