Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
Real-time insight of oil & gas markets
Reporting on key macro data at the time of release.
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.Free Access
MNI: BOE Tenreyro - UK Productivity Risks Skewed To The Upside
-Tenreyro: Expects Couple of Bank Rate Hikes If Econ Evolves As BOE Forecast
By David Robinson
LONDON (MNI) - Bank of England Monetary Policy Committee member Silvana
Tenreyro said Monday she anticipated a couple more Bank Rate hikes in the next
couple of years if the economy were to evolve in line with the MPC's central
But she warned that if productivity growth differed from the MPC's
expectations this would alter the rate path.
In her inaugural speech as an MPC member, Tenreyro told an audience at
Queen Mary College in London that the risks to the MPC's productivity forecast
were skewed to the upside. If productivity growth does turn out stronger than
the committee anticipated, at first glance that would suggest an even lower path
for Bank Rate, but Tenreyro said that the evolution of demand in response to
productivity changes would be key.
"If the economy evolves as in our November forecast, with steadily
increasing domestic inflationary pressures, I expect perhaps a couple more
increases in Bank Rate will be required over the next three years. But a
different outturn for productivity growth would affect that policy rate path,"
The MPC hiked Bank Rate to 0.5% in November and her comments are consistent
with market expectations for it to crawl up to around 1.0% over the three year
Productivity growth, however, is a wildcard with the MPC only anticipating
a gentle rise in productivity from its historically low levels. Tenreyro looked
at the evidence and concluded that productivity growth could be more robust than
She noted that just two sectors, finance and manufacturing, accounted for
the bulk of the UK's productivity slowdown.
The financial sector's drag on productivity should evaporate with
deleveraging ending and firms' and households' leverage ratios returning towards
historic norms. The global recovery should alleviate the pressure on investment
"Strong global growth should help support a recovery, especially if
uncertainty were to be resolved," Tenreyro said.
"In the medium term the risk to productivity may be skewed to the upside,"
"The question from an MPC perspective will be how quickly demand responds,"
London School of Economics Professor Tenreyro joined the MPC on July 5 last
year and her term runs until July 4, 2020. In November, she voted with the
majority on the committee in favour of a 25 basis point rate hike.
--MNI London Bureau; tel: +44 203-586-2223; email: email@example.com
Sign up now for free access to this content.
Please enter your details below and select your areas of interest.
Why Subscribe to
MNI is the leading providerof news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.
Our credibilityfor delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.