Leading the Bank

Mark Carney must tread carefully ahead of 2015

 

Share

The challenges facing the Bank of England are easily stated. How to cool a housing bubble, especially in London, without damaging the rest of the country? How to best signal, and in due course implement, a rise in interest rates without scuppering a recovery growing in strength and breadth?

And how not to appear to be the chief cheerleader for the Chancellor of the Exchequer in the approach to a general election?

On the first, the Governor of the Bank, Mark Carney, has a comprehensible narrative. Interest rates are there for the whole economy and formally for the control of inflation, though in practice are more targeted on unemployment these days. A different set of controls on bank and building society lending – “macro prudential tools” in the jargon – are supposed to prevent bubbles and, thus, financial instability (though the Bank would have a greater chance if it didn’t have to deal with the Treasury’s reckless subsidies to house buyers).

On the broader economy, the messages are also getting across. Employment, despite the caveats that should be attached to low-paid, part-time and temporary work, and the true nature of the new “self-employed” (some being merely rebranded underemployed workers), is growing. When rate rises come, we expect, they will arrive in baby, predictable steps – and slowly, say, 0.25 percentage points every few months or so. By the time they arrive next year, wage growth should have picked up so that this does not represent too painful a squeeze on household budgets. (Besides, the strength of sterling is already doing some of the work.)

So the consensus remains that the Bank will start the long road to monetary normality with a quarter-point hike next spring. This prospect is already being spun as “good news” by ministers, as proof of George Osborne’s wise management of the economy. As if his communications strategy were not challenging enough, in the months ahead Mr Carney needs to be careful in his presentation of policy lest he appear to endorse Coalition economic reforms in advance of polling day. Good luck with that, Governor.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Web Developer - Junior / Mid Weight

£15000 - £25000 per annum: Recruitment Genius: To support their continued grow...

Recruitment Genius: Marketing Data Specialist

£22000 - £25000 per annum: Recruitment Genius: They are the go-to company for ...

Recruitment Genius: Search Marketing Specialist - PPC / SEO

Negotiable: Recruitment Genius: This is an opportunity to join the UK's leadin...

Recruitment Genius: Sales Administrator

Negotiable: Recruitment Genius: This caravan dealership are currently recruiti...

Day In a Page

Read Next
Rafael Nadal is down and out, beaten by Dustin Brown at Wimbledon – but an era is not thereby ended  

Sad as it is, Rafael Nadal's decline does not mark the end of tennis's golden era

Tom Peck
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test