Tomorrow's Business Today
When talking less is more
Let’s agree that the Bank of England has a rough job. For all of the analysis that goes into it, deciding how to price interest rates is as much instinct as science.
Otherwise the Monetary Policy Committee, and the experts in the City, would all agree with each other before the fact and after it. Which they never do.
And Professor Hindsight is lurking to explain just how badly wrong they got it.
That said, suggestions that the Bank has bungled it lately aren’t all unfair.
That it was too slow to raise rates coming out of the last banking crisis meant it had no choice but to ratchet them up in the face of an energy crisis.
Surely, if it had moved rates earlier, it would then have been able to cut rates as recession loomed, rather than do the opposite.
Since it’s not clear those rate rises had any real impact on inflation anyway, it stands accused of doing the wrong thing at the wrong time.
Dominic Lawson in The Sunday Times begins: “Sometimes I wonder if the governor of the Bank of England is enjoying a private joke with himself to see how many groups of people he can annoy by asking them to take responsibility for the job that is his and his alone: to bring inflation under control.”
Lately, people who retire too early are somehow to blame. Previously, it was people asking for pay rises (as if anyone is likely to turn one down).
To his credit, Andrew Bailey puts himself out there. He isn’t hiding, he isn’t distant, he’s trying to explain what the Bank is thinking to anyone who will listen.
Sometimes that’s when he is summoned to sit before MPs – he can’t skip out of those.
Otherwise, it’s possible that he and his team are just oversharing.
Just today, MPC member Silvana Tenreyro, said inflation is going to tumble and that we need sharp cuts in interest rates, and quickly.
“I expect that the high current level of Bank rate will require an earlier and faster reversal, to avoid a significant inflation undershoot,” she told the Royal Economic Society.
There are all sorts of things she doesn’t know and cannot control that could undermine that message in weeks if not days. So why say it?
The Bank of England is one of our best institutions. It has enormous power to act in our interests. The people who work there are diligent and public spirited.
But maybe they all just talk too much, offering hostages to fortune for critics who see every u-turn as a clear sign of failure.
As Lawson says, for the governor, “Better not to talk at all, and at least retain some of the mystique of his position.”
y for scrappy insurgents founded by people fed up of working at big agencies.
Press release of the day
Large businesses need to take better care with corporate passwords, warns this from NordPass.
Too many still use the “king and queen of poor passwords – 123456 and ‘password’.”
Jonas Karkyls says: “On one hand, it is a paradox that the wealthiest companies on the planet with financial resources to invest in cybersecurity fall into the poor password trap. On the other, it is only natural because internet users have deep-rooted unhealthy password habits.”
Stories that will keep rolling
1) Are second hand car prices still soaring at Lookers?
2) How much are regulators to blame for recent bank turmoil?
3) Is the Co-op Group enjoying the difficulties at John Lewis?
4) Is Hilton Food seeing inflation begin to fall?