Posts tagged 'Mervyn King'

VFM central banking

Gaspard Koenig has been sounding off, entertainingly, at the Centre for Policy Studies on the costs associated with the Banque de France — whose governor, Christian Noyer, has been pressing Hollande’s government to make deeper and quicker cuts…

Let’s take a look at the Banque de France, which recently published its annual report. Apart from being lavishly located in the Hotel de Toulouse, a 17th-century gem, its operating costs are bewilderingly high. It employs 13,000 agents for a total human resources expenditure of nearly €1.5 bn a year (including pensions). With 6% of its staff aged under 30 and 32% over 55, the Banque de France’s age pyramid looks more like a cocktail glass.

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Bernanke, King, Blanchard et al LIVE

It’s streaming from the LSE and is ostensibly about what economists and policymakers should take from the financial crisis. However, if we were cynical folk we’d suggest this makes a nice opportunity for Bernanke and King to get together, have some wine and go all Norman-Strong. Our eye’s on the ground tell us such luminaries as Carney and Yellen are also in attendance.

Anyway, enjoy, we know all the LSE alums here who made us post this will… Read more

Fantasy central banking

Like Top Trumps, just not as much fun…

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The Hand of Draghi (aka Mariodona)

Let’s go back to May 2005, to a lecture delivered by Bank of England governor Mervyn King at the Cass Business School… Read more

The strange case of ‘funding-for-lending’ confusion

The market continues to chew over last week’s surprise announcement by the Bank of England and the Treasury about a collaborative funding initiative for UK banks under their joint auspices.

Under the initiative the Treasury will back a “funding for lending” programme, which is intended to reduce borrowing costs to those banks that engage in lending, while the Bank of England breathes life into a previously announced Extended Collateral Term Repo (ECTR), a cross between a UK LTRO equivalent and a credit easing programme. Read more

Her Majesty’s LTRO?

Actually, maybe not the best analogy. Bank of England governor Mervyn King did announce the activation of cheap, long-term funding for UK banks against wide collateral in his Mansion House speech on Thursday.

But there’s an element of credit easing… Read more

The Japanese liquidity trap, revisited

If anyone is an expert on the unintended effects of quantitative easing, it’s the Bank of Japan.

In fact, one might say, what the Fed, ECB, BoE are facing today, the BoJ has already faced. What’s more, what the BoJ is facing today, the Fed, ECB, BoE will face too. Read more

Albert the (financial) Populist

Albert Edwards is with Terry Smith on this one.  If Shredded Fred must lose his knighthood, then certain other players in this game of bubble and crunch need to forego an honour or two.

But while Smith has focused on Sir Alan Greenspan, Edwards has it in for Sir Mervyn King. From the SocGen man’s latest Global Strategy Weekly… Read more

UK economy contracts in fourth quarter

Britain’s economy contracted slightly in the last quarter of 2011, official data on Wednesday showed, raising fears of a double dip recession, the FT reports. The data underscore the message on Tuesday from Sir Mervyn King, central bank governor, that the path to recovery will be “arduous”. The Office for National Statistics said that in the last three months of 2011, GDP slipped by 0.2 per cent, slightly more than the 0.1 per cent decline forecasted by economists surveyed by Thomson Reuters. For the year ended December 31, GDP has risen by 0.8 per cent The data show that the nation’s singl largest sector, services, was flat for the quarter, although it covers 21 different components. Of these, 8 showed an increase in outputWhile output in the nation’s services sector – its largest business sector – was flat in the fourth quarter when compared with the third quarter, the output of productive industries, including manufacturing, fell by 1.2 per cent.

BoE governor asks the impossible

From Financial Stability Report, December 2011.

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MPs demand ‘radical overhaul’ of BoE

The Bank of England needs an overhaul of its accountability and governance that would clip the wings of its over-mighty governor, a parliamentary committee has demanded, reports the FT. The Treasury select committee report published on Tuesday calls for a powerful supervisory board within the Bank to review policy and oversee the Bank’s actions on interest rates and regulation. It also seeks greater parliamentary control over the appointment and dismissal of a governor and a statutory responsibility for the chancellor to take control of fire-fighting in a crisis when taxpayer funds are at stake. People close to government, who declined to be quoted, told the newspaper that the current proposals created a single point of systemic risk in Sir Mervyn King or any future Bank governor because the Bank’s Court of directors did not provide effective corporate governance. Andrew Tyrie, who chairs the House of Commons Treasury committee, details the committee’s recommendations for a “radical overhaul” of the BoE separately in the FT.

“Stagnation beckons” for the UK

Mervyn King was right: this will be worse than the 1930s.

At least that’s the message from a depressing summary of the UK economy by Citigroup’s Michael Saunders and Ann O’Kelly, who argue that this recession-recovery cycle will be worse than after the Great Crash. Read more

UK recovery off-track, says King

Britain’s economic recovery is off-track, Sir Mervyn King warned on Tuesday night as he defended the Bank of England’s decision to pump money into the economy again by purchasing £75bn of gilts over the next four months, the FT reports. As consumer price inflation surged to 5.2 per cent in September, close to a 20-year high, the Bank governor justified the resumption of money printing – designed to raise growth and prices – on the grounds that he now thought it would take longer to return the economy, public finances and interest rates to normality. “We were on track,” Sir Mervyn told a business audience in Liverpool, “but the problems in the euro area and the marked slowing in the world economy have lengthened the period over which a return to normality is likely”. The Bank governor already had a gloomy outlook. In January he warned that, after adjusting for inflation, wages were set to be no higher in 2011 than in 2005, the worst period of increases in living standards since the 1920s. On Tuesday, he indicated spillovers from the eurozone crisis now made even that assessment appear too rosy.

UK recovery off track, says King

Britain’s economic recovery is off track, Sir Mervyn King warned on Tuesday night as he defended the Bank of England’s decision to pump money into the economy again by purchasing £75bn of gilts over the next four months. As consumer price inflation surged to 5.2 per cent in September, close to a 20-year high, the Bank governor justified the resumption of money printing – designed to raise growth and prices – on the grounds that he now thought it would take longer to return the economy, public finances and interest rates to normality, reports the FT. “We were on track,” Sir Mervyn told a business audience in Liverpool, “but the problems in the euro area and the marked slowing in the world economy have lengthened the period over which a return to normality is likely”.

Darling launches stinging attack on King

Alistair Darling has launched a stinging attack on Sir Mervyn King, claiming the Bank of England governor did not understand the unfolding financial crisis in 2007, took the wrong policy action and ended up undermining the Bank’s independence by endorsing Conservative banking reforms. The FT reports the former Labour chancellor says the Bank of England’s poor handling of the crisis cast serious doubt on whether it should be given new regulatory powers, with even more responsibility put in the hands of the governor. Mr Darling’s memoirs of his time at the Treasury give a chilling account of the “permanent air of chaos and crisis” at the top of the Labour government, claiming that Gordon Brown was deluded and thought the economic downturn would last only six months.

Dear Mr Chancellor [updated]

It’s letter writing time again at Threadneedle Street.

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Mervyn Maradona

The Bank of England governor is a rule-breaker, just like Argentinian football star Diego Maradona.

So says Malcolm Barr over at JPMorgan: Read more

The difficulty of defining domestic inflation

Have you heard? High inflation is OK. Or rather, increasing the Bank Rate wouldn’t do much to solve it at this time.

It’s not really news if you’ve been watching recent justifications for UK monetary policy, true, except — Wednesday’s MPC minutes broached the idea that high UK inflation might not stop more QE, since domestic inflation is dying out. Read more

King commits Bank to ‘big picture’ regulation

Sir Mervyn King has committed the Bank of England to focusing on big risks to the banking system when it takes charge of financial regulation at the end of next year in an attempt to lower the cost of bank regulation and reduce the burden of data collection, says the FT. In his Mansion House speech to a City audience, the Bank governor called for powers for sweeping top-down regulation, rather than a return to a “light touch” approach. Read the speech here. And if you’re so inclined, the Telegraph has done a wordle, which shows that the words “new” and “financial” were used a lot by Sir Mervyn.

Mervyn, crucified [updated]

UK CPI annual inflation came in at 4.5 per cent in April, up from 4.0 per cent in March, according to the Office of National Statistics. As FT Alphaville points out, that’s the biggest year-on-year rise since October 2008; the second-biggest one-month increase on record and a record high in core CPI. It’s also all down to a stupid seasonal quirk: A late Easter.
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UK inflation *non fail* shock

Cue sighs of relief at the Bank of England on Tuesday morning following news UK CPI had fallen to 4 per cent YEAR-ON-YEAR in March from 4.4 per cent YEAR-ON-YEAR in February.

MPC still split in four directions

The minutes of the Bank of England’s MPC meeting in March released on Wednesday morning show that the committee lines up in exactly the same way as it did last month.

One member (Posen) wants to ease monetary policy, by increasing QE. Five members (King, Tucker, Fisher, Bean, Miles) voted for no change at all. Two members (Weale, Dale) voted for a 25 basis points increase in bank rate. And one member (Sentance) voted for a 50 basis point increase. Read more

More forecast busting UK inflation

What price a May (or even April) rate hike after Tuesday’s higher than expected inflation reading? What price a mea culpa from Mervyn King?

City reels after King demands break-up

The City was abuzz with talk of Mervyn King on Monday, as the Square Mile digested a weekend interview in which the Bank of England governor took swipes at the banking industry, the FT reports. Bankers, consultants, even regulators, were puzzled: why was the country’s central bank boss expressing ever more extreme views about the City and why now? The tone of Mr King’s interview in Saturday’s Daily Telegraph raised some hackles, in particular his suggestion that unscrupulous bankers were keen “to make money out of gullible or unsuspecting customers”. But it was the content, and specifically his insistence that a fundamental restructuring of the banking sector was needed, that really rankled.

King upbeat on UK inflation

Mervyn King, Bank of England governor, forecast on Tuesday that UK inflationary pressures will recede by summer, after higher taxes and oil prices feed through to consumers, reports the FT. The Bank believed inflationary pressures would be “pretty much back to target” by around mid-year, King told the Commons’ Treasury committee, noting that this year’s increases in value-added tax and oil prices would be fully reflected in retail prices by summer. But, he warned, year-on-year comparisons meant the headline inflation rate would remain high “until well into 2012”. Essentially, says the FT’s MoneySupply blog, King was claiming to have defeated the inflation problem, possibly with the help of some “simple statistical manipulation”.

Balls warns King on Bank credibility

Ed Balls, UK shadow chancellor, has criticised Mervyn King, Bank of England governor, saying he should step out of the political arena and stop tying his credibility to the coalition’s “extreme” deficit-reduction plans. In an FT interview, Balls drew comparisons between King’s stance and the backing lent by the Bank to the Treasury’s fiscal hawks during the Great Depression. Balls, an architect of Labour’s move in the 1990s to give the Bank its independence, said central bank governors should avoid “tying themselves too closely to fiscal strategies, when they are extreme…” He believes the governor is risking the Bank’s reputation by endorsing policies that could tip the UK into double-dip recession and mass unemployment.

Selling England by the pound…

… is the title of the 1973 album from ‘prog rockers’ Genesis, and it also sums up the UK’s inflation problem, according to Bank of England hawk, Andrew Sentance.

In a speech at the Institute of Economic Affairs ‘State of the Economy’ conference on Thursday, the Monetary Policy Committee member says the value of the pound needs to be a key area of focus (not neglect) for the UK’s central bank, if it is to have any hope of mitigating the impact of global inflationary pressures. Read more

Britain’s banks on the (upward) run

Well, the lobbying seems to be paying off…

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BofE lays ground for rate rises

The Bank of England said monetary policy had to be tightened to bring medium-term inflation back on track, confirming market expectations that interest rates would start rising in May, reports the FT. In a letter to the chancellor George Osborne following news of a 4% increase in UK consumer prices last month, Bank governor Mervyn King said inflation was “likely” to return to the Bank’s official 2% target on “the assumption that [the] Bank rate increases in line with market expectations”. His remarks confirmed investor expectations of a series of quarter-point rate hikes, beginning in May. Mortgage lenders have already withdrawn or repriced fixed rate deals in the expectation of higher interest rates. FT Alphaville meanwhile has a view on what King should have said.

Dear Chancellor…

Time to get the quill out again, Governor.

From the Office for National Statistics on Tuesday morning: Read more