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
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
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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
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:
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
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
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:
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
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
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 year. Read more