Adam Posen, the new addition of the Bank of England’s monetary policy committee, has been speaking on Tuesday morning at his appointment hearing before Parliament’s Treasury Committee.
And true to form Posen, who has called for wholesale sackings at failing banks, is speaking his mind.
From Reuters.
BOE MPC MEMBER DESIGNATE POSEN – UK NEEDS TO FIX BANKS BEFORE HITS HARD GOVT BORROWING CONSTRAINTS
BOE’S POSEN – CANNOT INDEFINITELY SUBSTITUTE GOVT SPENDING FOR PRIVATE CREDIT CREATION
BOE’S POSEN – USING GOVT FUNDS FOR CREDIT TENDS TO BE VERY INEFFICIENT
BOE’S POSEN – WANT TO HAVE BANKS RECAPITALISED AND ON FIRM BASIS BEFORE FISCAL STIMULUS WITHDRAWN
BOE’S POSEN – GOVERNMENT HAS TO TAKE ON FISCAL MEASURES THAT ARE TEMPORARY, REVERSIBLE
BOE’S POSEN – I DON’T THINK UK FISCAL PLAN IS ENTIRELY CREDIBLE RIGHT NOW
BOE’S POSEN – WHEN ECONOMY HAS BOTTOMED, POLITICAL SITUATION CLEAR, MUST STATE BROAD FISCAL CONTOURS
BOE’S POSEN – NEED SIMPLER CAPITAL RULE WITH HIGHER STANDARDS THAN BASEL
BOE’S POSEN – DON’T SEE ANYTHING THAT MAKES UK PARTICULARLY VULNERABLE TO ASSET PRICE BUBBLES
BOE’S POSEN – I DO NOT SEE THE 2 PCT INFLATION TARGET BEING A CONSTRAINT ON GROWTH
BOE’S POSEN – NOT THE MPC’S ROLE TO GET INTO SPECIFICS OF FISCAL POLICY
Hmmm. The last point is debateable.
Anyway, the BoE has published Posen’s written questionnaire to the Committee on its website and it is worth a look, especially his comments on Japan, the post crisis growth rate of the UK economy and QE exit strategies.
Here’s a taster.
Third, I will begin research on the three-dimensional exit strategy that all central banks and governments in the OECD, including critically the UK, must undertake from their emergency policy measures when the crisis is past. I say “three-dimensional” because exit will require the removal of monetary ease and liquidity, the reversal of fiscal stimulus and deficits, and the withdrawal of guarantees for, and some public ownership of, the financial sector. The timing of each on its own terms, with what practical indicators policymakers should watch, is of vital importance, as is the sequencing of the exit in each of the three areas when they will interact.
Related link:
The Bank hires an axeman – FT Alphaville