Yesterday Mark Carney – who hates it when politicians say anything about him – had a pop at Boris Johnson, ridiculing his optimistic approach to Brexit as seeking “cake and consumption”. Set aside the impropriety of the Bank of England governor making such a political swipe, Brexit was a deep psychological blow for people like Carney – but at least managed to give him an excuse to keep the economy on the drug of rock-bottom interest rates. Employment is at a record high, inflation is over the target but Carney said yesterday that he still doesn’t think it is “the time to begin that adjustment” – i.e. rate rises.
The thing is, it’s not up to him. It’s down to a vote in the eight-member Monetary Policy Committee and at the last count three of them wanted a rise. One of those hawks, Kristen Forbes, has since left, leading to much relief amongst the debt addicts. But now Andy Haldane, the chief economist of the Bank of England, has switched sides. In a speech in Bradford he declared that the “balance of risks associated with tightening [monetary policy] ‘too early’ and ‘too late’ has swung materially towards the latter” and that “a partial withdrawal of the additional policy insurance the MPC put in place last year would be prudent relatively soon”. He revealed that even he considered voting for a rate hike at the last meeting.
To make this declaration a day after Carney disgraced his office with his political jibes against the government is a splendid slap down and underlines Haldane’s claim for the top job when Carney goes back off to Canada. And with his thoughtful speeches, always rich in original data, he might even be something Britain hasn’t had for some time: a central banker who doesn’t respond to every problem by flooding the economy with printed money and dangerously underpriced debt.
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