If the Bank of England has launched three inquiries into its handling of the financial crisis, it must have something to hide. One general review would be much better than a trio of specific reports.
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The Bank of England was given independence in 1997. As Sir Mervyn King has fallen out with both Labour and Conservative politicians, that might be seen as evidence of the governor’s independence. But his replacement needs to be work with government, not against it.
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March 2012 marks three years of the UK’s quantitative easing programme and the Bank of England is ready to continue with QE3. But has it worked? And how do we unwind this massive experiment in monetary manipulation?
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Where is the fine line between warning of economic problems and exacerbating those troubles? Britain’s chancellor and central bank governor are dangerously close to crossing the line and causing the crisis they are trying to halt.
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It’s so long since the Bank of England hit its inflation target that maybe the time has come to rip up that objective and find a new loadstar for the economy to follow?
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Don’t bet on the pundits who are forecasting UK interest rates will rise in May. The Bank of England might want to move then but it will delay its decision until June – or get in early with an April increase.
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Instead of the Bank of England governor constantly having to write to the chancellor explaining why the inflation target has been missed, perhaps George Osborne should write the letter to Mervyn King? Downing Street seems to be at least as much to blame for Britain’s high inflation as Threadneedle Street.
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Of course UK interest rates will rise during 2011: the half per cent is a totally unnatural rate. On the street, the black market cost of money is at least 3 per cent for savers and 5 per cent upwards for borrowers.
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This is the sober decade following the champagne years that preceded the credit crunch, claims the Bank of England’s governor. But it looks suspiciously like we are returning to a past when Britain sought to solve its problems through high inflation and devaluation.
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If the Bank of England admits it got its old forecasts wrong, why should we think its new predictions on the economy are right? Perhaps the Bank just isn’t very good at guessing the future?
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