"It has helped institutionalise the consensus that inflation does more harm than good," he said. But he said members of the Monetary Policy Committee had not yet faced a testing time. "They have been perfectly competent," he told MPs on the Treasury Committee.
Reflecting on what history knows as the Lawson boom, he said: "In the late 1980s politicians were saying interest rates would stay as high as it takes, as long as it takes, but they were not believed." The independence of the Bank gave that kind of assurance more credibility, he said.
Lord Lawson also complained that subsequent revisions to statistics meant it was impossible to forecast accurately. But in the end, the art of monetary policy boiled down to judgement rather than forecasts. "The Bank needs accountability, mystery and an impressive governor," Lord Lawson said. "All this juju with the mathematical equations and charts is good for their mystery."
And on the eve of this month's MPC meeting he also had advice for Eddie George. "The Governor has to make sure that every time there is a vote he's on the winning side. He can try to make them agree with him, but if not, he's got to agree with them."Reuse content