A lot can happen in two years, just ask Governor Bailey

A lot can happen in two years.

Countries can go through the worst of a global pandemic and (hopefully) come out the other side.

Policymakers can win plaudits and crash and burn.

Nations can go to war.

Governors of monetary authorities can oversee the largest level of central bank intervention in markets ever.

That is what Andrew Bailey has gone through. Today marked his second anniversary of taking over from Canadian Mark Carney as head of the Bank of England (whose birthday, incidentally, was also yesterday).

No doubt Bailey deserves credit for heading the Bank’s swift reaction to the pandemic in March 2020 by launching an unprecedented bond buying programme and sending rates lower to provide a floor for the British economy.

But, his record since then is murky at best.

Markets now treat him with trepidation as a result of his communication gaffe in the run up to the November monetary policy committee (MPC) meeting.

Worse still, low income households saw his comments about asking workers to tame pay demands as extremely glib given he could not answer a question about how much he is paid (£575,000 including pension).

Bailey’s role as chief of the Financial Conduct Authority during the London Capital and Finance scam dragged him into a crisis at a time when his attention should have been on optimising monetary policy to help the economy during the Covid-19 crisis.

Traders just want certainty over central banks’ policy path. That can be achieved through consistent communication about the trajectory of interest rates, and then delivering on those words.

The City is braced for a third rate hike in a row tomorrow.

Bailey would be playing with the Bank’s reputation once again if he and the MPC decide to do otherwise.