I’ve worried for some time about potential clashes, overlaps and underlaps between the Bank of England’s Monetary Policy Committee, which does as its name suggests, and the Financial Policy Committee, which oversees system-wide financial rules, or to use its posh name, macroprudential policy.
The past month has proved the concerns are no longer theoretical. Although Sir Mervyn King, BoE governor, was more expansive on his black mood at the Treasury Select Committee this morning, the tensions between different policy arms were also laid bare.
The Treasury Committee held its latest hearing with the Bank of England this morning. The governor, Sir Mervyn King, along with three other members of the Monetary Policy Committee — Spencer Dale, David Miles and Ben Broadbent — took questions from lawmakers.
Here are some of the highlights, though lowlights is perhaps more apt.
Black clouds The governor was characteristically gloomy, warning repeatedly about the “black clouds” hanging over the UK, emanating from the eurozone. He warned that businesses “lacked confidence to invest today” because of the sovereign debt crisis, which could result in a “self-fulfilling” downturn in Britain. No change there then.