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Leader: Pick a tune and stick to it

We have talked before about the confusing messages coming out of the Bank of England but, last week, things got just a bit more ridiculous with Andy Haldane’s comments.

Mark Carney was plucked from across the pond to become the governor of the BoE and he received a film star-like welcome. One of his first moves was to introduce ‘forward guidance’, whereby the Monetary Policy Committee said it would consider a rate rise once unemployment had fallen below 7 per cent.

When this happened, the guidance was made broader, taking into account 18 economic factors. It was at this point that the phrase “spare capacity in the economy” became used by Bank officials on an almost daily basis.

Of course, we are not criticising the move to examine a wider range of factors. In fact, forward guidance in its original format seemed basic and a blunt way of assessing when rates should rise.

However, the mixed messages coming out of the Bank are less easily forgiven.

In July, Carney said “a process of adjustment will likely come into sharper relief around the turn of the year”.

Fast-forward to last week and the Bank’s chief economist, Andy Haldane, was heard saying that there could be a need to loosen monetary policy further in order to support economic growth.

It is time the Bank picked one message and stuck to it; or, alternatively, made no such announcement until it was clear when rates would rise. This would save mass confusion among the general public.

Meanwhile, we have decided to extend the nominations deadline for the Mortgage Strategy Awards. The new cut-off point is close-of-play on 25 September. Best of luck.


Lynda Blackwell FCA

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