BoE launches hub to monitor fintech

Bloomberg

Developments in fintech could boost the UK’s sluggish productivity growth and the Bank of England has started a unit to monitor its developments, Deputy Governor Dave Ramsden said.
“We have set up a new Fintech Hub that will sit at the heart of the bank, to consider both how the bank understands and how it applies fintech, relevant to its mission,” Ramsden said. “Given the size of the financial sector in the UK, I can see fintech driving competition and a pick-up in productivity in the medium term.”
The new unit will add to the bank’s ongoing research efforts on digital currencies, and runs parallel to Chancellor of the Exchequer Philip Hammond’s fintech strategy, also unveiled. Speaking at the Treasury’s International Fintech Conference in London, Ramsden said the hub would “play an active role” in Hammond’s taskforce.
The central bank has already been delving into cryptocurrency issues over the last few years, particularly through its Fintech Accelerator, which has contributed to the ba-
nk’s understanding of distributed ledger technology.
“We are now looking to build on the success of the Accelerator by integrating its key approaches into our business as usual activities,” Ramsden said. Ramsden spoke hours after the BOE announced a decision to keep interest rates on hold. Ramsden didn’t comment on the outlook for monetary policy in the speech.

RATE HIKE
The Bank of England is signaling that investors have it right when it comes to the likelihood of a May interest-rate hike. Officials, who kept the key rate at 0.5 percent at March’s meeting, acknowledged on page one of their minutes that markets are pricing a 90 percent chance the next decision will be to increase borrowing costs. Importantly, they made no attempt to question that view throughout the rest on the document.
That silence effectively endorses the investor outlook, given that policy makers have in the past used the minutes to push back against the market’s assessment. Two of the nine Monetary Policy Committee members, Ian McCafferty and Michael Saunders, said rates should have risen immediately.
A May increase would put the BOE firmly on a tightening path as it attempts to tame inflation, after it raised rates for the first time in more than a decade in November. While the bank intends to move slow enough to avoid rocking the economy, the signs are that slack has been used up and wage growth is accelerating.
Another hike this November is now seen by investors as having about a 56 percent probability. At the end of last year, markets predicted barely even one quarter-point increase over the whole of 2018.