Charlie Bean’s speech on Wednesday evening was grim, even by central bankers’ standards.
Mr Bean is the Bank’s deputy governor with responsibility for monetary policy. But he doesn’t seem to think that particular policy strand can do much good. Either now, or in preventing the next bubble.
Not only did Mr Bean echo the governor’s warnings over the effectiveness (or lack thereof) of more quantitative easing in the current climate, he is also sceptical that monetary policy can curb the build-up of credit bubbles. Read more
Mervyn King, Governor of the Bank of England
There is still more than 14 months to go before Sir Mervyn King leaves the Bank of England, but he is already in danger of appearing a lame duck as the race to succeed begins in earnest.
Today the FT reported that Mark Carney, the governor of the Bank of Canada, has been approached in relation to the job by a member of the Bank’s court, its governing body, having spoken to three people involved in the process. Mr Carney declined to comment. The Bank of Canada said the report was not accurate.
The FT also reported that the Treasury wants Charlie Bean, deputy governor for monetary policy, to remain in post after his term expires in June 2013 to provide some continuity as the top echelons of the Bank are rearranged. No one has denied this part of the story and Mr Bean has told colleagues he is willing to accept any offer to stay on for an interim period. So where do these events put the runners, the riders and those subtly touting themselves for the job. Read more
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The minutes of this month’s Monetary Policy Committee meeting, out on Wednesday, will reveal whether all of the nine-strong committee backed the decision to expand quantitative easing by £50bn.
Many think the decision will have split the committee. Read more
Sir Mervyn King is not known for his fondness for international travel, preferring to send one of his two deputies – Charlie Bean and Paul Tucker – whenever possible.
The governor, however, has traditionally made an exception for the IMF/ World Bank autumn meetings. Read more
In another extremely clear speech from Charlie Bean, the deputy governor of the Bank of England highlights the difficult trade off the Bank faces between the genuine fears of a feeble recovery and the growing signs of more persistent inflationary pressure.
As I have pointed out before, Mr Bean faced a similar dilemma in 2008, wrote about it, and is slightly chastened by the experience. In today’s speech there is something for everyone although the most interesting parts are on page 8 and 9.
First, he articulates the reality that accounting exercises showing weak domestically generated inflation completely fail to acknowledge that domestic prices would be different (and higher) had VAT, energy prices and import prices not risen. This is something Mervyn King also used to stress until he stopped. Read more
VAT, energy prices and import prices contributed about 2-4 per cent to headline inflation at the end of last year (blue band in chart, right), according to estimates quoted by the Bank of England. Compare that with a contribution of -0.5-1.3 per cent (green band) from more typical domestic (and more manageable) factors such as wages and producer profits, to catch a glimpse of The MPC’s policy dilemma.
That is the title of Charlie Bean’s speech, just delivered at ABI’s Economics and Research conference in London. Be careful interpreting these numbers: the -0.5-1.3 per cent range of inflation contribution “does not provide an estimate of what inflation would have been if commodity prices, the exchange rate and VAT had all remained at their 2007 levels,” said Mr Bean. Without movements in sterling and global prices, “inflation might have been somewhat higher than indicated by the green swathe”. But they would be unlikely to have pushed inflation “materially” above target. Read more
Charlie Bean, the deputy governor of the Bank of England, critisises the logic of looking at the rising reserves and claiming this means QE does not work, writes Chris Giles of the Financial Times Read more