Bank of England: Andrew Bailey doesn’t have long to restore credibility
Bank of England governor Andrew Bailey, who most in the City believe has a tough job that he’s done badly, must be tearing his hair out. To borrow, repurpose and ruin an old nursery rhyme, it’s a case of data data everywhere, but not a drop that makes any coherent sense.
The latest wage growth numbers, which emerged yesterday, can be read in all manner of ways; as giving scope for a cut in rates sooner rather than later, or simply indicating that wage growth remains bedded in far above inflation. Inflation, however, is headed downwards rapidly in the UK – but not as rapidly as we thought, judging from this morning’s inflation figures – but not so much in the US or Europe.
Oh, and the economy may or may not be in a technical recession already, but we will have to wait and see for another few weeks until the numbers are released.
Sticking those numbers and the subjective view of the Bank’s agents and economists into whatever malfunctioning machine the Bank of England has used for its economic forecasting in recent years is likely only to provide a confused response, and the Governor will need to earn his money over the next few weeks attempting to steer a course through it.
Ironically, his biggest job is not to steer the 9-person monetary policy committee, nor should he be kept awake at night on deciding when to cut. In the grand scheme of things, after the last few years we’ve had, going a month early or a month late will not appear in hindsight to amount to more than a hill of beans. What matters is much bigger: restoring the Bank of England’s shattered credibility.
Tin-eared commentary, open-ended speculation and mismanaged expectations have been hallmarks of Bailey’s regime, and his various lieutenants – few of whom have so far matched up to the departed Andy Haldane’s quiet competence – have not helped their boss, either.
The communications strategy which has served the Bank well for decades – say not a lot unless you’ve got something to say, and then do it in good time – must return sooner rather than later.