The man’s an instant star. Out of 50 UK-focused economists and strategists polled by Reuters ahead of today’s interest rate decision by the Bank of England’s Monetary Policy Committee, just one got it right: Simon Ward of New Star Asset Management.
While his peers at rival institutions typically put the chances of a hike at somewhere between 10 and zero per cent, Ward plumped for a 55 per cent chance that the Bank rate would rise to 5.25 per cent.
Why the maverick (and accurate) call? Well, Ward confesses to over-riding his own economic model. “I have my own MPC-ometer that crunches 10 variables. It suggested three hawks on the Committee this month and five next. But I had to apply a bit of reasoning — if that was what was predicted for next month, what was to stop the MPC moving now.”
By all accounts the economist is not prone to wild pronouncements. “He’s a very calm, sensible fellow who tends to come out with some remarkable insights,” says one New Star colleague.
The New Star man, who cut his teeth in the forecasting business with Tim Congdon at Lombard Street Research, notes that there is an expectation for the Bank of England to only move in months when it is publishing an inflation report. But with the British economy growing at above trend, a slew of surveys showing robust business confidence and a steady stream of evidence pointing to upward pressure on wage settlements, Ward saw no good reason why the MPC should delay.