Bank of England to give policy guidance once Carney takes over: Reuters poll

Wed Jun 12, 2013 11:28am EDT
 
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By Jonathan Cable

LONDON (Reuters) - Mark Carney will give markets guidance on monetary policy soon after he takes over as Bank of England governor next month, according to a Reuters poll that also predicted an end to asset purchases.

Carney, a Canadian, takes the wheel from Mervyn King at the start of July and according to the majority of respondents in the poll of over 40 economists who answered an extra question one of his changes will be to give markets a steer on policy.

"To show he is a man of action, we expect Mr. Carney to introduce explicit forward policy guidance in August," said Simon Wells, chief UK economist at HSBC.

"The UK economy seems to be improving. But we've had several false dawns before - weak demand means the new BoE governor faces familiar challenges."

With an economy stuck in a rut for over two years the Bank has printed 375 billion pounds of money through bond purchases but the poll gave only a median 45 percent chance that it would top up its asset-buying quantitative easing program.

King has been in the minority calling for additional quantitative easing and with bright spots beginning to emerge the probability of the printing presses being restarted has steadily declined.

Carney's fondness for bond purchases is uncertain.

Official data released late last month showed the economy grew 0.3 percent in the first three months of the year and business surveys have pointed to a solid start to the second quarter. <GB/PMIS>   Continued...

 
Bank of Canada Governor Mark Carney speaks during a news conference upon the release of the Monetary Policy Report in Ottawa April 17, 2013. REUTERS/Chris Wattie