If George Osborne had put the Bank of England in charge of compiling the Treasury’s output gap forecasts, he might have been going in to the next election promising even bigger spending cuts.
Around half of businesses understood Forward Guidance. But only 23% of households apparently took on board the Bank’s central message that rates would remain low for longer.
If Mark Carney really thinks it was “unreasonable” to expect business investment to play a part in driving the recovery, he should have a word with his own forecasting team.
If Threadneedle Street thought traders’ expectation of rate rises were “not warranted” in July it’s going to be tricky for the Bank to label expectations of an even more rapid rise warranted now.
Here’s the transcript of my interview with Martin Weale of the Bank of England’s Monetary Policy Committee. The write-up will be published in The Independent tomorrow morning.
1) Warns that NGDP target likely to prove inflationary; emphasises practical problems of implementing
2) Says that QE “certainly not parked”
3) Sees no evidence that fiscal multipliers have been higher [...]
The justification for deferring bonuses is to incentivise bankers to take more care over the risks they take. What this research shows is that a three-year delay just isn’t long enough to perform this job.
Mr Carney has aggressively attacked the US “Volcker Rule”, which will prevent American investment banks playing the global capital market casino, in strikingly similar terms to the banking lobby. And radical structural reform of the sector looks likely to be anathema to the next Governor.
Why is Europe, which likes to present itself as an opponent of speculative “Anglo-Saxon” finance, lining up with the US banking lobby? For me it fits a pattern.
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