LONDON, April 30 (Reuters) - A policymaker who is due to join the Bank of England’s rate-setting committee in June kept his cards close to his chest about his views on monetary policy on Wednesday, though he stressed the importance of asset prices and banks.
Andy Haldane, named last month as the Bank’s next chief economist, told lawmakers at an appointment hearing that he could not say whether or not he would be in line with Monetary Policy Committee’s “centre of gravity”.
“As we come closer to the point where we begin the process of unwinding this extraordinary monetary stimulus, the scope for disagreement I think is likely to pick up,” he said.
Economists are watching closely for clues as to Haldane’s views on questions such as how long the BoE should keep interest rates at their record low levels as Britain’s economic recovery picks up speed.
Haldane said interest rates were widely expected to rise only gradually and not immediately.
On the question of forward guidance - or the BoE’s policy of giving a steer on how long it likely to keep rates on hold - Haldane said he could see merit in doing more to spell out the path of interest rates.
He also said he intended to carry on looking closely at potential risks to the economy from the banking sector, something he does in his current job as the Bank’s financial stability director.
Haldane’s appointment is part of a wider shake-up at the BoE undertaken by Governor Mark Carney who wants to bring the Bank’s monetary and financial stability functions closer together.
Asked by lawmakers about how monetary policy should react to asset price bubbles, Haldane said financial factors, particularly asset prices, played a more central role in an economy than was typically reflected in macro-economic models.
The BoE’s current chief economist Spencer Dale is due to take over Haldane’s role overseeing financial stability.
Dale told lawmakers on Wednesday that while Britain’s housing market was not showing signs of being in a price bubble at the moment, policymakers “should be nervous” about the pace of the recovery. (Reporting by David Milliken and Huw Jone; writing by William Schomberg)