mervyn king

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If a close confidant had asked Sir Mervyn King, governor of the Bank of England, a year ago which City institutions he would like to take down a peg or two, the answer might well have been: Goldman Sachs and Barclays.

It has happened more by accident and opportunism than by express design, but during the past six months, the governor has duly hit those banks where it hurts. Read more

close up of the Bank of England sign©EPA

At ease: the BoE has put £375bn into the UK economy

Two questions arise when the lacklustre performance of the UK economy is discussed: what more should be done? And what more can be done?

Sir Mervyn King, governor of the Bank of England, gave pretty clear answers to both in a speech on Tuesday nightRead more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

The Federal Open Market Committee meets on Tuesday to set monetary policy for the coming month and a half. The committee votes on Wednesday afternoon. Here’s the FT’s US economics editor Robin Harding on what to expect: Read more

Michael Steen

According to the Maradona theory of monetary policy, as outlined by Sir Mervyn King, governor of the Bank of England, a central bank can let expectations that it will act – rather than actual action – do the work for it.

The theory is being tested right now by Mario Draghi, president of the European Central Bank, as his controversial “outright monetary transactions” bond-buying programme is forced to sit on the benches until the prime candidate for help, Spain, applies to the EU’s bailout fund.

As a quick reminder, the Maradona theory refers to the 1986 World Cup quarter final between England and Argentina. Diego Maradona scored a celebrated goal with a run from near the halfway line in which he beat five England players by, er, running in a straight line. Read more

Chris Giles

For almost the entire time the Bank of England has enjoyed operational control of monetary policy, the redistributive effects of monetary policy have rarely hit the headlines.

The public appeared to accept that interest rate rises hit borrowers and benefited savers and vice versa. The vast majority of the commentary related to the analysis of whether any monetary policy change was warranted by the prospects for inflation. This, in Britain at least, was the way the Bank of England liked it.

Unelected officials feel very uncomfortable about being seen to favour one group of society over another. Redistribution, after all, is properly something for elected politicians, since it involves using the power of the state to take money from some to give it to others.

It is noteworthy, therefore, both that the distributional effects of quantitative easing are now being raised vocally by strong lobby groups and that the Bank is feeling peeved, rightly so.  Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

ECB’s big bazooka

Next week’s main event is, of course, the European Central Bank’s second offer of cheap three-year loans.

Attention is fixed on whether the take-up will be greater or less than in December, when the central bank loaned €489bn. Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC meeting

The Federal Open Market Committee meets on Tuesday and Wednesday to set monetary policy for the coming month and a half.

The meeting – to be followed by one of chairman Ben Bernanke’s press conferences – could see the FOMC announce an inflation target. This from the FT’s US economics editor Robin Harding: Read more

Claire Jones

Hello and welcome to today’s live blog on the Treasury Select Committee’s hearing for the Bank of England’s Financial Stability Report.

The governor will be giving evidence, as will executive director for financial stability Andy Haldane, and external Financial Policy Committee members Michael Cohrs and Robert Jenkins.

This post should update automatically every few minutes, although it may take longer on a mobile device. All times are London time.

13.18 The live blog is now closed.

13.17 Here are the key takeaways from today’s hearing:

  • The Bank is clearly nonplussed with the Treasury Committee’s call for a strong supervisory board. Sir Mervyn

 Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

Volcker rule

Daniel Tarullo, the governor tasked with the regulation brief at the Federal Reserve Board, will answer questions on the Volcker rule following criticisms by the Japanese and Canadian authorities this week. Read more

Claire Jones

Controversy over Philipp Hildebrand continues to rage. This from the FT’s Haig Simonian:

The Swiss National Bank will pay its former chairman a full year’s salary of about SFr900,000 ($942,000), in spite of his stepping down voluntarily in only the second week of the year.

The bank said Philipp Hildebrand’s contract entitled him to 12 months’ pay. The first six months covered his notice period, with the remainder compensating him for a clause in his contract that prevents him from working for another bank until next January.

The pay-off will stoke a political storm in Switzerland over Mr Hildebrand’s departure following revelations of currency transactions by his wife, and is likely to fuel the wider debate in Europe over bankers’ remuneration.

At Sfr900,000, Mr Hildebrand’s salary is high for the head of a central bank. The terms of his severance package are also generous.  Read more

Chris Giles

Here is a prediction. Now the Federal Reserve has moved towards publishing explicit interest rate forecasts, the Bank of England will follow suit. Moreover, it will happen sometime after June 2013.

The reason for my prediction isn’t as simple as the fact that central banks are assiduous followers of fashion, even though they are. But that the more forward-thinking officials in the Bank believe in increasing transparency and have a rather less cynical view of the British public and media than the current governor, Sir Mervyn King.

As Robin pointed out in his post on Tuesday, the Bank of England’s current forecasts have some advantages. By forecasting growth and inflation on the basis of two assumptions for monetary policy (constant policy and market expectations of interest rates), the growth and inflation forecasts are consistent with the assumptions for monetary policy. If inflation is forecast to be lower than target at a two to three year policy horizon, the implication is clearly that monetary policy is likely to loosen and vice-versa.  Read more

Claire Jones

It appears that ECB president Mario Draghi had better things to do this afternoon than turn up for the European Systemic Risk Board’s press conference.

As chair of the ESRB, Mr Draghi was widely expected to join vice-chairs, Sir Mervyn King and Andrea Enria, the head of the European Banking Authority, at today’s presser.

But instead Sir Mervyn was left to apologise to the journos present that they had been left with just him and Mr Enria.

Money Supply has been assured that there was nothing untoward behind Mr Draghi’s no-show. But it would be unthinkable that an ECB president would miss the press conference that follows the monthly governing council vote on monetary policy.  Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

Draghi hearing

ECB president Mario Draghi returns to Brussels on Monday to speak in front of the Committee on Economic and Monetary Affairs at the European Parliament.

The hearing begins at 16.30 local time (15.30 GMT) and will be broadcast live on the ECB’s website.

The European Central Bank’s governing council (the executive board plus the governors of the eurozone central banks) and general council (as before but also including the heads of other EU central banks) meet on Thursday. One doubts there will be much Christmas cheer on offer between Christian Noyer and Sir Mervyn King. Read more

Claire Jones

Last week, Sir Mervyn King added to the gloom by saying that the eurozone woes are creating a “spiral” characteristic of a systemic financial crisis.

It would appear that the Bank of Japan is similarly concerned that we could be in for a shock of Lehman-like proportions.

This from deputy governor Hirohide Yamaguchi:

  Read more

Claire Jones

Sir Mervyn King. Image by Getty.

Sir Mervyn King. Image by Getty.

Welcome to our live blog on Sir Mervyn King’s appearance at the Treasury select committee.

The governor has been called before the committee to field questions on the Monetary Policy Committee’s latest inflation report, which came out earlier this month.

Reporting by Claire Jones. All times are GMT.

17.16 This live blog is now closed.

17.14 Given that the hearing was supposed to be about the MPC’s inflation report, it was ironic that the governor ended up revealing more about what the FPC is likely to recommend in the financial stability report later this week. Read more

Claire Jones

The governor of the Bank of England has often been critical of eurozone leaders, frequently condemning their failure to accept that the region’s sovereign debt crisis is one of solvency, not liquidity.

But, at the Bank’s Inflation Report presser on Wednesday, Sir Mervyn was a little more supportive of the region’s central bank.

Forget calling for the ECB to become lender of last resort for the more troubled of the eurozone’s governments, he said. It was simply not the responsibility of it, or any other central bank, to take on such a role. Read more

Claire Jones

Sir Mervyn King never misses an opportunity to tell us of the need for the global economy to rebalance. And marking the release of the new £50 note, which features Matthew Boulton and James Watt, proved no exception.

The new £50 note. Image by Bank of England.

This from the governor:

 

 Read more

Claire Jones

Mervyn King

Mervyn King. Image by Bloomberg.

Welcome to our live blog on Sir Mervyn King’s appearance at the Treasury Select Committee.

The governor is joined by Charlie Bean, deputy governor for monetary policy. The have been called before the committee to field questions on the Monetary Policy Committee’s decision to restart its asset purchases.

11.25 The live blog is now closed.

11.25 Here are the key takeaways from today’s session. Read more

Chris Giles

Listening to Wolfgang Schäuble, German finance minister, speak in London yesterday, he was genuinely shocked by Britain’s 4.5 per cent inflation rate in August. The Weimar Republic and the 1923 hyper-inflation still looms large in the German psyche.

Just imagine what he would make of today’s rise in the consumer price inflation to 5.2 per cent, the highest rate of inflation in Britain since the early 1990s.

I have not seen his text, but I am sure Sir Mervyn King will show his Anglo-Saxon side when he makes one of his three major speeches of the year tonight and will explain why he, unlike Mr Schäuble, is not concerned about inflation’s spike. Expect to hear about VAT, energy prices and commodities and that domestically generated inflation remains very low. Sir Mervyn can say nothing else.

What else can we say about today’s inflation figures and monetary policy? Read more

Chris Giles

At less charitable moments, I have described the Bank of England’s attitude towards “credit easing” as akin to belligerent buck-passing. By burying a 2009 agreement with government to buy private sector assets and investigate ways to increase the availability of credit to the corporate sector, the Bank was putting purity before pragmatism, I argued.

Having listened to subsequent Bank explanations of its attitude towards credit easing, it appears that the Bank is actually taking a leaf out of the book of the Bundesbank and the European Central Bank, showing it to be a true believer in Ordnungspolitik – the German concept of order and playing by the rules, which has no direct English translation, but was brilliantly explained by Ralph Atkins last yearRead more