LONDON – The pound has jumped early on Wednesday afternoon after one of the Bank of England’s key policymakers signalled that he is close to backing a hike in interest rates.
Speaking in Bradford, Andy Haldane, the BoE’s chief economist, and a member of its Monetary Policy Committee said that a “partial withdrawal of the additional policy insurance the MPC put in place last year would be prudent relatively soon,” effectively saying that he is almost ready to increase rates.
That buoyed investors in the pound, with the currency jumping from virtually flat to a gain of close to 0.5% on the day. Here’s how that looks, as of around 12.20 p.m. BST (7.20 a.m. ET):
Prior to Haldane’s speech, sterling was broadly flat after the Queen delivered Prime Minister Theresa May’s legislative plans for the next parliamentary session in her speech at the State Opening of Parliament, leaving out several key promises from the Conservative Party’s manifesto.
May was widely expected to make concessions from the election manifesto in order to get the legislative programme through the house and allow her to create a new government after she failed to secure a majority.
Earlier on Wednesday, the pound dropped to a new post-election low, dragged lower by Bank of England Governor Mark Carney’s assertion on Tuesday that interest rates should not increase anytime soon.
Sterling’s fall on Wednesday morning followed on from a big drop on Tuesday. The currency tumbled more than 1% during trade on Tuesday after Carney told financiers at London’s Mansion House that he does not believe interest rates should be increased, saying: “From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.”