IF MARK Carney, governor-designate of the Bank of England, wants a change in the institution’s monetary policy to give economic growth equal priority with inflation control, he wants it done softly-softly.
He also wants it by consensus and debate.
His performance in the Commons before the Treasury select committee was something of a master-class in squaring circles. Throughout three hours of light toasting by MPs – rather than the grilling they sometimes deliver – Carney proved adept at suggesting he had the flexibility to be open-minded about so-called nominal GDP targeting to rev up Britain’s sputtering economy, but with no risk of us becoming a Weimar Republic with rampant inflation.
Yes, Britain needed more monetary stimulus in these exceptional circumstances. Yes, the Bank of England might need to look at widening the assets it buys under the quantitative easing programme. And yes, the precise timing of bringing inflation back to its 2 per cent medium term target might be looked at with wiggle room added.
But at the same time price stability was the best gift any central bank could give the population, Carney said. There was something in his responses for everyone.
There has been a suspicion in the City since his appointment and subsequent (perhaps) kite-flying public utterances, that Carney is not as sound on inflation as the current Governor, Sir Mervyn King.
But he is certainly like King, and the central banker calling in general, in preferring to speak in paragraphs rather than in short sentences.
It says much about the performance by the current head of the Bank of Canada that in a year or two’s time the Bank of England could have ramped up its emphasis on economic growth, or just stuck with the anti-inflation knitting, and Carney could point back to what he said yesterday to justify either.
With the governor-designate, it looks like the proof of the pudding is going to be in the eating.
Yesterday’s hearing shows Carney, highly respected by his international peers, can (at least currently) eat select committees for breakfast.
He has all the economic and intellectual credentials, looks unfazed by the political game, and clearly likes to keep his options open. We could have done worse.
Vodafone will have to dial some new numbers
A WELL-trodden path for many industries is to react to declining markets with a drive into emerging economies while cost-cutting like billy-o at home.
Mobile telecoms giant Vodafone may have to accelerate its application for this club’s membership. Previously strong markets for the company in northern Europe took a downturn in the third trading quarter, following the pattern of economically distressed southern Europe.
Mobile phone usage is being cut, and it looks inevitable that Vodafone will have to compensate by ramping up expansion elsewhere, and taking the knife to the European back office costbase.
Organic service revenues fell 2.6 per cent in the three months to end-December, worse than the 1.4 per cent fall in the preceding three months.
Not much consolation to Vodafone, but it is amazing that electronic technology is moving at such a clip that once go-go areas – like mobile networks – are faltering.