BoE Governor Mark Carney, along with other MPC members Andrew Haldane, Gertjan Vlieghe and Kristin Forbes, will be testifying before the Treasury Select Committee on Tuesday morning 10am GMT. The topic is the November Inflation Report and its forecasts.
Given that global headwinds are among the primary reasons for the Bank of England's (BoE) cautiousness on the policy path, market participants will be pricking up their ears on Tuesday to note if there is any mention of the policymakers' sentiment about the latest security enhancements across Europe following the terrorist attacks in Paris last week, and the impact those events may have on the economy.
The events in Europe come against expectations that the US Federal Reserve (Fed) may begin with the first increase in interest rates as early as in December this year.
Otherwise, not much has changed since the November Inflation Report in terms of macro fundamentals, or the outlook for inflation, so we might not see any significant change in stance from the policymakers.
Broadbent in absence
The lawmakers may probably ask, even though in absence, about the latest comments by Ben Broadbent, who last week perplexed some by saying that the market participants and commentators should not over-interpret the BoE's inflation forecast, or the market yield curve, when projecting the path of interest rates movements in the UK.
Broadbent also said that it would not be wise to loosen monetary policy further to help return inflation back to target. He argued that just as the Monetary Policy Committee (MPC) looked through temporarily high inflation in 2011-12, when the economy was weak but inflation was significantly above target, the MPC should also look through the temporary effects of too low inflation at the moment, when the economy is stronger, the output gap is nearly closed, but inflation is low due to external factors.
Andrew Haldane
The annual report from the BoE chief economist, and arch-dove, Andrew Haldane is expected on Tuesday morning to be published shortly before the Treasury Select Committee (TSC) hearing.
When asked by CNBC on November 11 about the possibility of a further policy easing in the form of cutting the rates into negative to spur inflation and recovery, Haldane said: "The vast majority of the Monetary Policy Committee are voting to leave rates on hold ... and I am in that position as well ..and we watch the data carefully as it flows through for signs the economy could be slowing down further, or indeed picking up ... for now [a rate of] 0.5% feels about right."
"Overall, I think we maintain good degree of strength of the economy in the UK. Price pressures are weak, wage growth remains still pretty low, so support is still needed for the economy. But overall the growth we have got is around trend and the recovery looks pretty robust," he added. But in a speech he gave a day later, Haldane reiterated that his view was that "the case for raising interest rates is still some way from being made," Haldane said.
Kristin Forbes
Unlike Haldane, Kristin Forbes, another rate-setter to be grilled before the TSC on Tuesday, seemed less gloomy about the economy about a month ago, when she said that "Although the risks and uncertainties in the global economy have increased, the widespread pessimism is overstated."
Forbes further argued that the UK's domestically-generated growth, which she said showed all the signs of continuing, even if at a more moderate pace than in the earlier stages of the recovery, had so far been strong enough to offset those external shocks and volatilities.
Mark Carney
Not much has been heard of Governor Mark Carney speaking directly about the UK monetary policy since the November Inflation Report. One of the latest significant comments from the governor was from early October, when he reiterated that "the prospect of sustained momentum in the UK economy and the gradual firming of underlying inflationary pressure will likely put the decision as to when to start the process of gradual monetary policy normalization into sharper relief around the turn of this year".
Disclaimer: The information provided by WBP Online come from its Reporters and Foreign Correspondents and its third party suppliers ("Information Providers"). WBP Online believes its text services to be reliable, but accuracy is not warranted or guaranteed. This includes facts, views, opinions and recommendations of individuals and organizations deemed of interest.
Neither WBP Online nor Information Providers guarantees the accuracy, completeness or timeliness of, or otherwise endorses, these views, opinions or recommendations, gives investment advice, or advocates the purchase or sale of any security or investment.