Interest rates aren’t as influential as you think

Criticising the Bank of England has become fashionable in City circles. From persisting too long with quantitative easing, to completely missing the upsurge in inflation to the condescending group think displayed on the validity of its discredited New Keynesian models, the Bank under Andrew Bailey has done plenty to make itself fair game. But when […]

Without a recession, Bailey won’t wrest back control over inflation

Andrew Bailey, Governor of the Bank of England, admitted last week that interest rates will remain higher for some time to come.  The boss of the Old Lady said he stood by the target inflation rate of 2 per cent, but to get there, higher interest rates were necessary in the arsenal for the “last […]

It’s time the Bank of England rethinks monetary policy – and its own methods

The Bank of England’s handling of inflation has been met with increasing levels of criticism.  Despite its suite of academically fashionable mathematical and econometric models, the Bank seems to be acting in a daze, unable to comprehend what is going on. A paper just published in the American Economic Review advocates an alternative way of […]

Sunak’s flexibility has been curtailed by our undue reverence for the Bank of England

Rishi Sunak will deliver an updated Autumn Statement next week, after Liz Truss’ so-called “mini-budget” triggered her demise. His freedom for manoeuvre has been sharply contained by the new found reverence being accorded to the Bank of England and the Office for Budget Responsibility. The Bank of England has forecast a long recession, which could […]

From Northern Rock to lunch tables, no one is immune from the herd mentality

The Bank of England and Federal Reserve held a two-day conference last week in London on big data and machine learning. All very interesting stuff. There was an intriguing vignette as we emerged from the conference room for the frugal lunch on the first day. Straight ahead was a table with sandwiches, fruit and the […]