The Prime Minister has been quite right to dismiss calls to remove the Governor of the Bank of England, Mervyn King, with the blunt statement that "the issue of confidence simply doesn't arise." He would also be wise, however, to give the Governor a sharp reminder of the dangers of the head of the independent central bank being seen as too political.
Not that there is anything in the Wikileaks documents made available this week that would warrant a sacking or, as some MPs are calling for, a parliamentary investigation into his remarks last February to the US ambassador. Indeed, after all the accusations of being too favourable towards the Tories, it might even be thought beneficial to Mervyn King to be publicly revealed as criticising David Cameron and his putative Chancellor, George Osborne, in the run-up to the election.
The problem, however, is not the Wikileaks revelation – if, indeed, it is much of a revelation – but the way in which it has shown just how contentious a figure the Bank Governor has become. Any central banker, "independent" or otherwise, is going to take an interest in the Government's policies towards expenditure and revenue at a time like this. It would be irresponsible if he did not.
Mr King, however, has gone much further than this. From early on he has taken an increasingly public stance in favour of sharp expenditure cuts in a manner that was bound to – and did – appear to support the Tory case on the most highly-charged issue of the election. In the immediate aftermath of that election, it was the Governor's intervention, and in particular his warning to Nick Clegg and the Liberal Democrats of the urgent need for radical cuts, that helped to swing the party into coalition government.
It is little wonder that members of the Labour Party feel so passionately about the Governor's intervention, or that the more Keynesian-inclined members of the Monetary Policy Committee (MPC) might feel that the Governor has abused his position to, as David Blanchflower, a former member of the MPC puts it, "co-author the Coalition's strategy on the deficit. That is definitely not part of his job description."
Indeed it is not. In granting the Bank of England its independence, the then Chancellor, Gordon Brown, made a very clear distinction between its responsibility to control inflation through interest rates and monetary measures and the Government's right to lay down fiscal policies to influence the economy as a whole. Deficit reduction falls in the latter sphere.
Of course the Bank has to be concerned at the market reactions to policy. As the Irish and Portuguese have found, a fall in confidence among international investors could have a disastrous impact on interest rates. But it is also the duty of the Governor to keep out of the public argument when it becomes political and to give his advice to the Chancellor of the day in private.
That early and deep cuts are necessary to ensure recovery is not an article of faith in this country. Just the opposite. Having profoundly misjudged the initial stages of the financial crisis, Mr King's understanding of market sentiment, and what it will or will not tolerate from public policy, could hardly be called infallible.
However, to drop Mr King – whose contract was renewed, most reluctantly, by Alistair Darling, until June 2013 – at this stage of general market nerves would be folly. David Cameron and his Chancellor have every reason in any case to be grateful for his support of their policies. But they would be wise to remind the Governor of the separation of functions between Bank and Treasury and to remind him that an effective central banker is of necessity a discreet one.