The Banks Real Sin: Faulty PR

Last September, TB warned that how the central banks handled their external comms could be the difference between whether they saved the world from economic doom or failed to do so.

We wrote: “How the banks steer us through Covid and towards a new prosperity is a huge issue, perhaps the biggest there is this side of climate change. And the most important factor in how they get there will be good public relations.”

Some results just in: it’s a floperoo.

The Bank of England in particular looks culpable. It isn’t just what it did or did not do, it’s how it communicated its thinking and intentions.

It lost control of its own narrative, suddenly flipping in November from an insistence that inflation was a (passing) global problem and that rate rises would be pointless, to panicking about inflation and putting rates up in December.

At least one reporter told his editors in November that there would be a rate rise, then in December that there wouldn’t be. (Ok, it was me.)

That was a reasonable assumption based on what the Bank had been saying. But the issue is much greater than one egg-on-his-face hack.

Ollie Shah’s column this weekend was headlined: “It’s raising rates in a recession, but the Bank of England’s real sin is poor communication.”

He’s writing about how the Bank got it wrong, and concludes: “This is not mere PR: if markets lose confidence in the Bank and the Treasury, that is very bad news for sterling.”

More Shah: “The governor and the MPC must explain the difficult decisions they’re taking in language that is less Delphic and more human. And they must be consistent.”

None of this is the fault of the Bank’s actual PR department, which is good.

At a higher level, the communication was faulty.

Governor Andrew Bailey is a good guy with a very difficult job. He looks weak at the moment.