OUTLOOK: Bank's information job is not yet done

Rupert Pennant-Rea, the deputy governor of the Bank of England, is right to claim that the Bank is more open and direct than it used to be. But that does not stop misunderstandings that can cost investors money when they leap to conclusions.

Analysts who complain about confusing information must be too young to remember the days when a cold towel and the unofficial help of somebody well informed inside the Bank was the only way to understand what a speech by the Governor actually meant.

The summit of the Bank's art was to criticise the Treasury or some City group such as the clearing banks without being crudely obvious - indeed to give the attack some sort of deniability if challenged by an angry vested interest or a politician. Indeed,bankology was Britain's own version of Kremlinology, with a skill and language of its own.

Mr Pennant-Rea - by his own admission - used to make up articles about monetary policy for the Economist, because the subject was so impossibly inscrutable. Eddie George, in his days as deputy governor, made a determined effort to put plain English into speeches and ensure the Bank said what it meant.

This led to a marked improvement in understandability, which has accelerated with the publication of inflation reports, monthly minutes and all the new paraphernalia of monetary management.

There has been the odd disaster, such as when the Bank's off-the-record briefing on the inflation report steered the press in the opposite direction to the market's reading of what was said on paper. As a consequence, the Bank has been looking at whetherto continue the briefings, drop them - or even put them on the record.

One odd side-effect of this genuinely increased openness is that the markets are occasionally determined not to accept the simple explanation. The desire is to read more into speeches than is actually there. On Monday, the Governor's suggestion that he could not say whether or when he would raise interest rates again was taken as an easing of monetary policy concerns. He used virtually the same formulation in a select committee before Christmas, and was basically telling it as it is, rather tha n hinting at the precise timing of a rate rise. But with weak industrial output figures last week, investors jumped to conclusions and assumed wrongly that the heat was off.

While improved communications by the Bank are tremendously welcome, Mr George should not run away with the idea that the job has been done.

As his deputy said yesterday, in defence of the uncertainty in policy-making, monetary policy is somewhere between guesswork and a science. A large number of indicators are fed into the decision process. There can never be a rigid formula for assessing these and deciding interest rate policy. But the Bank should at least publish a much more detailed description of the framework it uses for analysing the mass of information.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect