Douglas Carswell's Blog

The Bank of England has made a mess of monetary policy

Back in March 2011, one member of the Bank of England Monetary Policy Committee (MPC) Adam Posen, assured us that by mid 2012, inflation would be down to 1.5 percent.

Today we learn that inflation rose slightly in March to 3.5 percent.    

In order to meet the Posen forecast, inflation is going to have to fall by more than half in the next ten weeks. That could still happen. Indeed, I rather suspect that short term, inflation will indeed fall, seeing as how all the new QE funny money the government has printed is still sitting inert on the balance sheets of the zombie banks.

When Posen made his forecast, he was quoted in the Guardian as saying that: “If I have made the wrong call .... I would not pursue a second term. They should have somebody who gets it right and not me.”

I admire such frankness and Mr Posen’s willingness to be held accountable. But why just Posen?  The Bank of England should, as Mr Posen says, have people who get it right.

But when do they ever get it right? 

The MPC has failed to meet its inflation target for years. Through a combination of easy money and low rates, they presided over the creation of a reckless credit bubble that burst with catastrophic consequences in 2007 – 08, nearly bringing down the cheap-credit-dependent banking system in the process. 

Since the consequences of their own monetary mismanagement came home to roost, the MPC has overseen a massive monetary stimulus – which has notably failed to produce any growth.

Quit bashing the investment bankers.  When do we get to hold the central bankers to account?

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