How should we judge Mark Carney’s long-awaited “forward guidance”? Do the Bank of England’s pronouncements on the future path of interest rates amount to authoritative foresight or meaningless waffle?
I’d like to be positive. The new Governor has barely got his feet under the table and is a decent man. Amidst sky-high expectations, he faces a formidable task. Yet my instincts tell me that “forward guidance” is counter-productive and could even be highly dangerous.
Finally, the British political classes are starting to get it. Finally, a head of steam is building. Over the last week, calls to impose a proper division between investment and commercial banking have become louder, more authoritative and part of mainstream debate. Pressure for the introduction – or re-introduction – of this crucial split could soon become irresistible, however much the politicians wiggle and the investment bankers deceive.
Until now, it’s been mainly nerds like me who’ve advocated a full Glass-Steagall separation. Given the vested interests that would lose from this change, we’ve been lampooned for our “hot-headed” views. Yes – our message is awkward. Life would become difficult (and less lucrative) for a lot of powerful people, were we to prevail. Yet we “Glass-Steagallers” are right. We have history, logic and common sense on our side. And now – thanks to Barclays ex-CEO Bob Diamond, and “Liborgate” – we also have political momentum.