King of the Inflation Nutters
I had been unsure what I could write about King’s legacy at the Bank of England, but the Governor provided a quote which captures it well. In the press conference today, this is how King responded when asked about the new remit, and whether the Bank needed more discretion:
No I don’t think we need more discretion as such, I think the two key features of the remit which I welcome are, one – reaffirming that the central objective of monetary policy, which is the main role of a central bank, is to meet the inflation target of 2% a year; in other words the commitment to price stability. Nothing is more important than that and the Chancellor has moved – well he wasn’t tempted to go down the path of giving up the target, he’s reaffirmed the commitment to price stability.
Mervyn King coined the term “inflation nutter” in 1997 to describe those who embraced stability of inflation above all else. Governor King in 2013, along with an entire generation of central bankers, will still claim “nothing is more important” than price stability. That is the legacy of King and the rest of the modern-day inflation nutters.