I have already mentioned patronising politicians this morning, so let me not miss out on mentioning patronising central bankers as well. As the FT reports this morning:
A senior Bank of England official on Monday said it was a question of when and not if the central bank would start reducing interest rates as a “reward” for continued declines in inflation, as policymakers lay the ground for easing policy this year.
They added:
Pill was speaking in an online question-and-answer session after the MPC last week held the BoE key rate at 5.25 per cent.
“Lower interest rates are a reward to the economy for better inflation performance,” Pill said. “It is the focus on when, rather than if, I think, that has been what the governor has tried to focus on.”
So, Pill, who very clearly does not understand the causes of inflation or the fact that it always goes away without action being required of anyone, and who has been responsible with Andrew Bailey for imposing misery on the UK by raising interest rates as testament to their monumental incompetence, then patronises us all by suggesting that he'll let us have a reward if people stop asking for pay rises, meaning that the economy is permanently rebiased towards the interests of capital and not labour.
Don't you just love being patronised by smug, self-interested, central bankers?
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The utter incompetence and sheer stupidity of these peopleis beyond belief how on earth do they get appointed to such positions of power..
Richard two typos live instead of love
Four members of the Bank’s monetary policy committee, and the Governor himself, are recruited by the Treasury and approved by the Prime Minister who just happened – for most of them – to be a man who would only let Brexiteers into such jobs, or those who pretended to be. It must have been difficult to find competent economists to decide on the Bank Rate and control our destiny. Fighting cost-push inflation is tilting at windmills.
And a typo from me
This a really crass way to describe the policy making process. Patronising? Yes… but I would just say utterly misguided and useless.
Mr. Pill should be “rewarded” with the sack!
Agreed
Ah, but sacking him would require someone in a position of authority in the BoE or the Treasury to understand the just how far adrift the BoE’s rate-setting policies are from economic reality. That might take some time and while we wait it would be interesting to know to what extent the BoE’s rates policies have increased UK inflation.
We can sort-of work out how raising the Bank Rate actually causes more inflation. In 2023 mortgage interest payments increased by 44.1% (and for owner-occupiers, they take a load of our disposable dosh anyway). Of course, the Bank doesn’t use the RPI so their view of inflation doesn’t reflect this. But many suppliers who provide goods and services on contract use the RPI to increase their charges (typically a rise each April of “RPI + 3.99%”).
Rents have shot up, too, because buy-to-let landlords have sold-and-buggered off, reducing the supply of rental homes.
Thank goodness energy prices have tumbled in the last few months. Well done the MPC! It must feel good to have such control over world commodity prices!
What about those two people on the MPC who wanted interest rates to go even higher last Thursday? Why, for Heaven’s sake?
Alas, partly as a result of smug, self-interested central bankers’ greed and ideology blindness to realities, an increasing many, do just live.
Thank you for your work where even typos have thoughtful power!
The smugness stems from all the UK political parties being content to turn themselves into a Nu-Oblivious Party. Where is the questioning in regard to how things actually work? Thatcher came up with the greed lie that the UK government cannot create its own money over 50 years ago and it still dominates the thinking of most British people. So too does the idea we don’t have to think much about how a striving for material possessions will have on the health of the planet. As you said yesterday Richard many politicians would appear to view the exercise of power as a stepping stone to a more lucrative private sector job post-politics. Hard to see how the British people can be encouraged to think more carefully about their future in the current context but the encouragement of greater curiousity is an obvious step.
Bit off topic, but if I understood right it was interesting to hear John Redwood of all people appearing to criticise central bank independence and mentioning the possibility of different interest rates being paid on QE related bank reserves during the report stage debate of the finance bill yesterday (around 17:48pm)
Weird….
Having sat through a few of Pills public Zoom sessions, and more recently a small group session with a deputy governor, smug and patronising describes them perfectly. Utterly detached from the wider economy and society. I really don’t understand whose interests they think they serve.
If all they can do is look at the chicken’s entrails (their DSGE models) and come up with half baked forecasts, they could be shrunk to a fraction of their size and treated like just another think tank.
Agreed
Isn’t he one of the 2 who recommended an interest rate rise last week?
No
They were indepdnent members as I recall it
He voted for the status quo
The two members of the MPC who wanted to ruin the economy and push up unemployment even more were not independent. They were carefully selected by a government which insisted that everyone in any position of power had to believe in Brexit.
Seeing Bailey recently on the box at his pompous , condescending worst, telling us how he was controlling inflation, made me think of a child on a fairground ride. The child is sitting in a model car, complete with steering wheel, pedals and levers, but of course they don’t do anything. The car is going where the ride takes it, but the child is certain they are controlling it by turning the wheel and pulling the levers. And when the ride stops and they get out safely, they’re certain it was their actions that got them there …
Very good….
Can I borrow for Twitter?
Very good analogy. Mine is that hiking up rates is like blood-letting in the 18th Century. Medical people thought it worked. There’s the true story of the French sergeant, wounded in battle, who was ‘saved’ by a doctor who bled him. In his report, the doctor claimed that if he had taken less blood, the soldier would have died.
Thanks Richard, please feel free to quote or re-post anywhere you feel appropriate!
Thanks
It is going very well in slightly edited firm on Twitter now
Who knows – it might get sent to Bailey himself! Someone in the Bank will get it.
I hope so….
Central bankers and their very very close cousins/identical twins?…… bankers. Which brings me nicely to this particular multi-billion Euro festering banking sore:
https://www.deutschlandfunk.de/cum-ex-geschaefte-wie-das-verwirrspiel-mit-aktien-100.html
(auto-translate is available).
For those unfamiliar with cum-ex – it has been festering for circa 30 years, it is a tax despoliation exercise implemented by bankers/financiers., the same ones that LINO is cuddling up to – and it begs the question – has it happened in the UK? (question to those that know more).
I mention this as an illustration that for the most part, bankers have no morals – & I’d suggest that by extension neither do central bankers – they are part of the same club,…. Pill,och!.. that man again! et al are cut from the same stained cloth as those that stole German, Danish, Dutch taxes (because that is was they did), not with a gun but with legal finesse. The bankers and financers have now moved into grooming the next UK gov & the results will be as bad as CUM-EX. The rather sad thing is, LINO and its leading lights are far far far too stupid to even see that they are being groomed. Which is unfortunate for UK serfs – who will, of course, pick up the pieces.
Laugh? cry? your choice & you WILL pay.
I do not think it did happen here
I’ll think of the technical easing some other time
Knackered tonight
Yes but why oh why are they never challenged or asked searching questions by BBC economic correspondents or why dont those correspondents invite one of the many economists/ political economists who would point out the self serving paucity of the Bank’s thinking.
I think I did hear one of the R4 Today programme presenters discussing wth some commentator how many of Sunak’s original five pledges had been achieved, and sort of suggest that his inflation pledge sort of would have happened anyway .
But there is never any full frontal discussion or challenge to the magical thinking of BoE and interest rates.
We dont have a free independent media.
There is a certain amount of religiosity in Pill’s statement that must serve to remind us all that FAITH – particularly in that which is orthodox – plays a big part in these matters – not observable facts.
Neoliberal economics is a faith cult
I’ll take the MPC seriously when it includes S Keen, D Blanchflower … and R Murphy!
Pill has clearly learnt nothing from the reaction to his comment about us all having to accept being poorer.
That would be fun
Even the committee behind the Bernanke review recognised the problem of group think. They won’t do what’s needed as they have one of the ‘group’ leading the review.