Bank of England

Brexit makes Carney less of a central bank oddity

1 Aug 2019

Bank of England boss Mark Carney is, like everyone, in the dark about whether Britain will crash out of the EU. Without that uncertainty, he might be tightening policy when peers are either easing or hinting they might. Being odd man out would be better than the current limbo.

Boris Johnson may spice up UK central bank race

24 Jun 2019

The frontrunner to succeed Prime Minister Theresa May tends to stray from the script. That increases the chances of an unconventional candidate replacing Mark Carney as the head of the Bank of England. If Johnson makes the pick, it could even be his most lasting legacy.

UK banks’ Brexit flak jackets look durable

12 Mar 2019

The Bank of England has told some lenders to triple their liquid assets in case of a hard Brexit, according to the FT. Lenders have quadrupled their easy-to-sell securities to 1 trillion pounds over a decade. Standby central bank funds provide extra armour in a no-deal scenario.

Central banks’ gold fever is anything but reckless

5 Feb 2019

Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.

New global bank cop faces political stress test

26 Nov 2018

Fed Vice Chair Randal Quarles is a strong choice to lead the Financial Stability Board but the Basel-based body faces many challenges. A divided U.S. Congress is fighting about whether to be tough or soft on Wall Street. Brexit and other forces will also test cross-border unity.

Breakdown: Libor habit is hard and costly to kick

23 Oct 2018

Over $300 trillion of financial contracts are linked to discredited benchmark interest rates. Switching to new ones could disrupt economies as well as markets. It will take a lot of money, time, and willingness to reconcile conflicting interests to avoid bad withdrawal symptoms.

Britain is making a mess of replacing Mark Carney

3 Sep 2018

The Bank of England boss may extend his term for a second time, keeping him at the central bank beyond June 2019. That could offer comfort to investors worried about Brexit. But it would suggest the government is struggling to find a good successor. That’s a bad signal to send.

Derivatives spat is bad omen for UK-EU regulation

27 Jun 2018

The Bank of England wants European authorities to provide assurance that contracts worth 100 trillion pounds will be valid after Brexit. The EU’s watchdog says banks must prepare for the worst. Playing politics with financial stability bodes ill for future regulatory cooperation.

BoE wrangle reflects rate setters’ identity crisis

22 Jun 2018

The opposition Labour party wants the Bank of England to include productivity targets in its mandate. The idea seems flawed - monetary policy is a weak tool for boosting efficiency. But it reflects a growing political dissatisfaction with independent yet impotent central banks.

Mark Carney may flummox markets again

10 May 2018

The Bank of England chief’s latest comments made investors doubt he will tighten monetary policy this year. Such scepticism is overdone. The economy doesn’t have to grow very fast to generate inflation and the jobless rate is very low. Rate expectations could shift once more.

Review: Saving central bankers from the mob

4 May 2018

How much influence should technocrats wield in a democracy? That’s the question former Bank of England Deputy Governor Paul Tucker attempts to answer in “Unelected Power”. His reply is thoughtful and robust but might end up drowned out by fractious politics or another downturn.

Quest for central bank transparency has limits

5 Apr 2018

UK rate-setters are debating the merits of more openness, by for example issuing official interest rate forecasts, the Financial Times reports. More information may not mean more insight. After all, good policymakers change their minds when the economic environment does.

Stars align for Mark Carney to raise rates again

22 Mar 2018

UK inflation is high enough for the Bank of England boss to further tighten policy in a couple of months but not so high as to hurt consumer demand, especially as wages are picking up. And Brexit poses less of an immediate danger. Politics and economics are both on Carney’s side.

Review: Why Brexit will ultimately please nobody

15 Dec 2017

Britons voted to leave the EU for myriad and conflicting reasons, according to “Brexit and British Politics”. It’s hard to see a settlement that addresses them all. The risk is that voters see Brexit as another betrayal by politicians, fuelling the disaffection that caused it.

Sorry is the hardest word for central bankers

16 Nov 2017

Bank of England Chief Economist Andy Haldane says rate-setters should speak simply and honestly to the public. The first is easier than the second. Admitting past mistakes or doubts about the present is tough for institutions whose clout depends on an aura of omnipotence.

Central bankers go self-referential on rhetoric

14 Nov 2017

Fed Chair Janet Yellen and other top rate-setters took the stage in Frankfurt to discuss how they communicate. It’s a slightly meta admission of the role speechifying has come to play in monetary policy in an era of ultra-low interest rates. But wordiness brings its own perils.

Central bankers’ superpowers are looking spent

2 Oct 2017

Between taming inflation, fighting the financial crisis and averting a breakup of the euro, monetary policymakers acquired an aura of omnipotence. Their responsibilities are growing and their mandates have turned into a fetish. A painful collision with reality is overdue.

UK banks are trapped in a pincer movement

25 Sep 2017

The Bank of England says lenders will face higher capital requirements – and all the more so if they are vulnerable to consumer loans souring. Meanwhile the opposition Labour party wants to cap credit card interest. Investors may have to give up hopes of ever-larger dividends.

What Carney can learn from Yellen

21 Sep 2017

Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.

Bank of England puts price on bond fund stupidity

12 Jul 2017

Regulators worry that the growth of open-ended bond funds could cause fire sales. A central bank paper estimates that could add nearly half a percentage point to companies’ funding costs. Pointy-headed analysis should reinforce the case for more sensible investment models.