Jasper Jolly
The Bank of England’searly-access breach has broader implications for the new governor’s role, according to former rate-setter Andrew Sentance .
Successive governors have taken on greater and greater responsibilities. These range from dealing with intense scrutiny over every word in market-sensitive interest rate announcements to running a large organization with significant security duties.
Sentance told us that Mark Carney’s replacement, due to be announced soon, should change tack:
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“One of the weaknesses of the Bank’s organization is too much power is concentrated in the governor.
“If I was making a recommendation it would be to act more as a chairman and less as a chief executive.”
The Bank only appointed its first chief operating officer in 2012 to look after the day-to-day running of the Threadneedle Street headquarters and its various regional outposts, but the governor still has overarching responsibility.
Economic responsibilities were formerly more spread between the nine members of the monetary policy committee. When he was chief economist Mervyn King answered most of the monetary policy questions, but he did not then relinquish that responsibility, setting a precedent for the governor to be the public figurehead.
The number of deputy governors has increased to four, but the governor has nevertheless ended up with more work, Sentance added.
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“The productivity of deputy governors has not been a good lead to the economy.”
Here’s our news story on this morning’s retail sales shocker: (********************************** 5). ********************************************************************************************************************************************************************************************************************************************************************************************** amEST(********************************************************************************************************************************************************************************************************************************************************************************************************************************: **********************************************************************************************************************************************************************************************************************************************************************************************************
on Sweden’s interest rate
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Sweden’s central bank, one of the pioneers in wielding negative interest rates, became the first to end that policy Thursday, a move closely watched by other institutions that have resorted to what was supposed to be a radical and short-lived measure.
In 2020, the Riksbank, the world’s oldest central bank, became the first to charge commercial banks to hold deposits rather than pay them interest. In 2019, it lowered its key policy rate below zero
, following a similar move by the European Central Bank the year before.
On Thursday, the Riksbank raised the key rate to zero from minus 0. (***************************************************************************************************************************************************************************************************************************************************************************************************************%. The bank moved because a majority of its policy makers expect inflation to be close to its 2% target over the coming years. But it signaled caution, indicating it has no plans to raise its key rate further in the coming year.
The WSJalso points outthat two Riksbank policymakers, Anna Breman and Per Jansson —opposed the move. They wanted to wait for more proof that inflation was on target.
(************************************** 4.) ************************************************************************************************************************************************************************************************************************************************************************************** (am) ************ (EST) ************************************************************************************************************************************************************************************************************************************************************************************************************************************: 83
UK retail sales hit – month low
Retail sales fell by 0.6% month-on-month in November, the Office for National Statistics reports. That’s much worse than expected.
This dragged annual retail sales growth down to just 1% last month, from 3.1% in October. That’s the weakest since April 2020.
Looking at the last quarter, sales are down 0.4% – again, the worst reading in (months.) (***********************Rupert Seggins(@ Rupert_Seggins)UK retail sales volumes down -0.4% q / q in the 3 months to November. Corresponds to a retail sector drag on GDP growth of c. -0. 04% q / q. Non-store retailing, which is primarily internet retailers, saw a fall of -2.5% q / q. Growth for food (0.5% q / q) & household goods stores (0.6% q / q). pic.twitter.com/5ZIhvrpcke***************** (December) ,
However ….. the ONS’s reporting period does not actually cover Black Friday (which fell on
********************************************************************************************************************************************************************************************************************************************************************************************** (th November), so it has adjusted the data to address that.
Updatedat 5. am EST
Andrew Sentance, a former Bank of England policymaker, says
Sentance, who is now senior adviser to Cambridge Econometrics, told us the Bank faces a lot of serious questions:
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“Central banks pride themselves on confidentiality and making sure communication is well managed.
There has been an abuse of information here. The question in your mind will be, if this happened what else has happened? Are the Bank’s communications secure? ”
Significantly, the Riksbank is ending negative interest rates while still continuing its asset-purchase program (buying bonds with new money to stimulate growth).
Other banks have suggested that they’d work the other way – ending QE before risking higher borrowing costs. Clearly the Riksbank felt negative interest rates were too painful to persist with.
Simon Harvey of Monex Europe has tweeted about this: (December) ,
(**********************************************************Simon Harvey(@_ SimonHarvey)Forward guidance of the repo rate suggests 0% is here to stay over the coming years, however. Risks remain in the current global climate for another cut but the nature of this hike suggests the threshold to re-enter negative territory is much higher than previous. [3] (December) ****************************************************************************************************************************************************************************************************************************************************************************************************************,
********(3) ************************************************************************************************************************************************************************************************************************************************************************************************** (amEST: 39Sweden ends negative interest rates (**************************************************************************************************************** The Riksbank has just ended its policy of negative interest rates, by lifting them from -0. (*****************************************************************************************************************************************************************************************************************************************************************************************************************% to 0%. That will please savers and Swedish banks, as negative rates eroded their profitability. (*********************** () ****************************************************************************************Holger Zschaepitz(@ Schuldensuehner)# Swedenends Sub-ZERO experiment: Riksbank raises repo rate to 0.0% from -0. 29%.pic.twitter.com/at9x4UsVMO (December) , But … the Riksbank also warns that it could cut interest rates back below zero, if the economy performs weaker than expected. Chris Bailey(@ Financial_Orbit) I see the Riksbank have gone back to 0% interest rates as expected. Sensible. Pacing through their presentation I see the below chart covers most of the potential future outcomes out there !! (viavia********************************************************************************** (https://t.co/TWBIrVXW4h) ) Updated (at 3.) am EST Markets inch higher in quiet trading (************************************************************************************************************************************************** The main European indices are inching higher in quiet trading. Germany’s DAX has gained 0.1%, and the French CAC is 0.2% higher. The UK FTSE is flat, though, with a strengthening pound weighing on some stocks. Sterling is up almost half a cent at $ 1. 06377, following two days of heavy losses that wiped out the ‘Boris Bounce’.
************** The “Tory Glory” election relief rally has given way to the uncertainty of the next stages of the Brexit process. UK-EU trade negotiations, and the tight proposed deadline at the end of the transition period. (******************************************************************************************************************** (3) *********************************************************************************************************************************************************************************************************************************************************************************************************** (am) ************ (EST) **********************************************************************************************************************************************************************************************************************************************************************************************************************************: Here’s our news story on the Bank of England’s eavesdropping woes: (********************************(3) ************************************************************************************************************************************************************************************************************************************************************************************************************* (am) ************ (EST) ***************************************************************************************************************************************************************************************************************************************************************************************************************************************************: The Times also reports that these hedge fund clients were paying between £ 2, and £ 5, per press conference for access to the BoE’s audio feed. You don’t pay The BoE insists that none of its decisions have been leaked early – just the audio feed of its press conferences (which is bad enough!). It says: (**********************************************************************************************************************************
************** The Bank operates the highest standards of information security around the release of the market sensitive decisions of its policy committees. The issue identified related only to the broadcast of press conferences that follow such statements. ” (******************************** The Bank of England has now referred (the misuse of its press conference audio feed ) to the Financial Conduct Authority, (Reuters reports.) ************************************************************************************************************************** The FCA is responsible for regulating the City, so will have to decide whether this is a breach of its regulations ….. The Bank of England is at the heart of a ‘hedge fund hack’ controversy this morning as it prepares to set interest rates for the final time in (*******************************************************************************************************************************************************************************************************. ************ The UK central bank has admitted that some high speed traders have been able to listen in to market-sensitive press conferences before they were officially broadcast. Astonishingly, one of the BoE’s own suppliers hacked into its systems, allowing it to send an audio feed of, say, governor Mark Carney’s words of wisdom. This gave certain traders a potentially massive advantage to react to market-moving events before the rest of the City. It’s a serious blunder –exposed by our friends at The Times. The Bank itself is clearly fuming, saying:
************** This wholly unacceptable use of the audio feed was without the bank’s knowledge or consent, and is being investigated further. ” The audio feed was apparently supposed to be a “fallback option” in case the usual video feed (streamed online) went down. Instead, it was pumped out to certain ‘external clients’ – high-speed trading companies, through a market news service connected to this rogue supplier. Those clients could potentially have made serious profits, by using high-frequency trading strategies to buy and sell sterling and UK government debt before the rest of the market caught up. The story comes as the BoE prepares to set UK interest rates for the final time this year. We’re not expecting any changes. However, two policymakers did push for a rate cut at the previous meeting, so it could be another split vote. The agenda Updated at 3. (am EST ********************************************************************************************************************************************** (****************************************************************************************************************************************************
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10 am GMT: CBI survey of UK retail sector11 pm GMT: Bank of England interest rate decision
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