Home > Bank of England, Monetary Policy > Honeymoon Over

Honeymoon Over

Mark Carney tried to explain Woodfordian monetary policy to some reasonably smart MPs today and he failed completely.  “Train wreck” would be a moderate description of how badly that Select Committee meeting went.

Is the 7% unemployment rate a target? Erm, well, you see…

What will happen if the 2.5% inflation knockout triggers?  Erm, well, you see…

Are higher interest rates a sign of looser or tighter monetary policy?  Erm, well, you see…

Is forward guidance a loosening or a tightening of monetary policy?  Erm, well, you see…

That was an awful public performance and painful to watch.  Carney has an impressive grasp of the UK data, but he was struggling to explain something as simple as the stance of monetary policy when forced to rely on the language of interest rates and “state-contingent guidance”, etc.  I’m sure it would be much simpler if he could stick to money and nominal incomes!

Video here, Heather Stewart has a decent write-up at the Guardian.

  1. Rajat
    September 13, 2013 at 03:32

    I wonder if this could be regarded as a good example of ‘Wood-fordian’ monetary policy… (the promise of higher hemlines in the future promotes more spending today)

    • September 13, 2013 at 09:43

      “Only in Japan” is the appropriate quote there.

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