A couple days ago, the BOE made the big announcement that Andrew Sentance will be walking out the door come June. But who is this mysterious former Goldman Sachs employee who has come to replace our beloved long-time hawk? Pipsters, say goodbye to Andrew Sentance, and hello to Ben Broadbent!
What are Ben Broadbent’s credentials?
Ben Broadbent, the newest addition to my list of favorite Bens which includes Ben Bernanke, Ben Franklin, and Ben Stiller (of course!), graduated with first-class honors from Cambridge University and holds a PhD from Harvard.
Currently, he works as a senior European economist for Goldman Sachs, a position he has held since 2000. He once served as an assistance professor at Columbia University, and has actually already worked for both the Treasury and the Bank of England (BOE) in the past.
Yeah, my eyes popped out when I saw his resume, too. But considering who he’ll be replacing, it’s only right that he bring a lot to the table!
He will be stepping in for Andrew Sentance, a well-respected and outspoken member of the monetary policy committee (MPC). Broadbent certainly has big shoes to fill if he plans on matching Sentance, one of the most (if not THE MOST) hawkish members of the MPC.
What is Ben Broadbent’s outlook on the economy?
While data suggests that inflation has been accelerating due to the rise in commodity prices and growth has stalled, Broadbent believes that they aren’t as extreme as how the headlines portray them to be. In fact, Broadbent even suggested that the MPC had been too pessimistic on the economy.
All in all, you could say that Broadbent’s view on the economy is somewhat upbeat. For him, the recent negative growth seen was merely a fluke brought about by poor weather, and that accelerating inflation will help the U.K. government to repair its balance sheet.
He also mentioned that he saw a lot of promise in the recent PMI reports. Looking at past data, you would see that the manufacturing PMI stood at 61.5, well in line with expectations, while the constructing PMI rose to 56.5 from 53.7.
Is Broadbent hawkish or dovish?
A lot of market junkies think that British Ben has a pro-growth outlook, which is just a fancy way of saying that he’s hawkish!
In January, he expressed his optimism for the economy saying that despite the tough austerity measures, the U.K. will be able to avoid a double-dip recession. To make his hawkish fan boys even giddier, he remarked that the MPC would probably hike rates sooner than BOE Governor Mervyn King would like. Broadbent predicted that the BOE could start tightening as early as May and continue until the latter months of 2012.
However, it seems like no one sees him to be as aggressive as Sentance. Despite his hawkish remarks, he still acknowledges that the doves have a point in arguing to hold off a rate hike in order to stimulate growth.
I know no one can truly replace Sentance and his extremely hawkish ways, and it’s for this reason that I think the pound may continue to mourn for the loss of one of the MPC’s biggest hawks.
But considering that Broadbent actually shares some of Sentance’s views, I don’t expect the pound to take on big losses. I mean, who knows, Broadbent may just surprise us all in the long run and assume the role of King Hawk!