I have an oped in UK’s City AM on Bank of England’s new forward guidance regime. Yes, I am disappointed…
ALMOST everyone will be disappointed by governor Mark Carney’s announcement yesterday. Those hoping the Bank of England would announce more monetary easing will feel let down. And while those of us hoping for strictly rules-based policy do have something to be happy about, Carney needed to go much further.
The Bank has now spelled out its own version of the Federal Reserve’s Evans Rule. The “Carney Rule”, as we might call it, implies that the Bank will commit itself to maintaining interest rates at the present level as long as unemployment is above 7 per cent, and the Bank’s inflation forecast is below 2.5 per cent….
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PS Mark Carney tightened monetary policy yesterday. Just look at the pound (it strengthened) and the UK stock market (it dropped). So those who fear that inflation is about to get out of control in the UK are very wrong.