Home > Bank of England, Crazy Loons, Monetary Policy > Martin Weale: “I Will Crucify Mankind Upon a Cross of 2 Percent Inflation”

Martin Weale: “I Will Crucify Mankind Upon a Cross of 2 Percent Inflation”

With thanks to Matthew Yglesias for that one.  MPC member Martin Weale is interviewed by the Daily Mail:

‘It is certainly not self-evident to me in the light of the apparent stickiness of inflation that substantial extra support for the economy would be compatible with the inflation target,’ he explains. ‘I am concerned about the stickiness of inflation.’

He adds: ‘The persistent worry we have is that if people get used to the idea of high inflation, if they take the view that the Bank of England isn’t bothered about the inflation target, it can lead to increased inflation risks and can affect the way in which people negotiate wages and set prices.’

Weale also warns that Britain could suffer an unprecedented ‘triple-dip’ – meaning the economy slides back into recession later this year after the briefest of revivals.

‘I certainly would not say there is no risk of that happening,’ he says. ‘What we have learned over the last four or five years is the capacity of the economy to surprise in ways people might not have thought possible.’

So.  We’ve had a “double-dip”, we might even have a “triple-dip”, and it is not “self-evident” to Martin Weale that the economy needs more “support”.  Because all that matters is price stability!

  1. October 11, 2012 at 23:05

    Surely William Jennings Bryan deserves some credit too?

    As I recall, in his long time at NIESR, Martin Weale was very much a Keynesian. I gather though he’s very much of the view that the crash was a correction of an unsustainable consumption boom, which probably means he’s a consistent Keynesian rather than a “there’s a recession; let’s spend lots of money!” Keynesian. They’re a rare breed…

    I wouldn’t go all the way with him, but in all fairness, he’s a member of the MPC and they’re there to set policy in support of the 2% CPI target. His view, which is pretty reasonable on recent evidence, is that that target seems to be at odds with further boosts to nominal spending.

    Now, you would say “the target’s wrong”. And I’d mostly agree with you there – but under the framework we have, it’s not his job to set the target, just to try to hit it.

    • October 12, 2012 at 08:52

      Duncan, on Bryan: yes, I suppose so :)

      As an unelected technocrat I’d say it’s his job to do the right thing. If he thinks the MPC is constrained from doing the right thing by their mandate then he should lobby for a better mandate.

      But it is hard to conclude he thinks they’re doing the wrong thing from his quotes. Like you say, it seems he thinks everybody’s left arm fell off in 2008, as Adam Posen puts it, and potential output was permanently slashed.

  2. Tony Holmes
    October 12, 2012 at 13:17

    Where is the statistical evidence of the “unsustainable consumption boom” ?

    • October 12, 2012 at 15:01

      None which does not rely on the post hoc ergo propter hoc fallacy :) See also: Australia’s sustained “unsustainable” growth (oh my god the debt, etc etc).

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