WEBVTT - Tories Start a Bank Brawl

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<v Speaker 1>Government will set the inflation target. The Bank of England

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<v Speaker 1>will be charged with the setting of interest rates and

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<v Speaker 1>it will do it through the Monetary Policy Committee that

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<v Speaker 1>will be the instrument for making the decision about the

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<v Speaker 1>interest rates. There is no membership of that chance or

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<v Speaker 1>Chief Secretary or anybody else. There is no politician involved

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<v Speaker 1>in that committee at all. That was then Chancellor Gordon

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<v Speaker 1>Brown at his first Treasury news conference back in he

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<v Speaker 1>stunned the City and Westminster by hand and control of

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<v Speaker 1>Britain's interest rates to an independent Bank of England. Well,

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<v Speaker 1>this week the old Lady of Threadneedle Street turns three

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<v Speaker 1>hundred and twenty eight, so we thought it would be

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<v Speaker 1>a good time to reflect both of the history of

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<v Speaker 1>the bank's independence and why it is now coming under

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<v Speaker 1>question thanks to the Conservative leadership candidates taking aim. I'm

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<v Speaker 1>David Merritt in the London studio and this is in

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<v Speaker 1>the City Blimber Podcasts, connecting you to the stories at

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<v Speaker 1>the heart of the City of London. And joining me

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<v Speaker 1>this week we have Bloomberg's senior economics reporter Phil Aldrich

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<v Speaker 1>and Bloomberg Television and Radio economics and government correspondent for E. M.

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<v Speaker 1>E A. Lizzie Burden, phil could you talk us a

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<v Speaker 1>little bit about the history and how the bank was created.

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<v Speaker 1>It started in six and it was a bunch of

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<v Speaker 1>city merchants, where a lot of them were French Huguenot

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<v Speaker 1>Protestants who left France and they wanted to help the

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<v Speaker 1>government finance their wars. So they said, look, give will

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<v Speaker 1>raise one point two million pounds, which obviously was a

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<v Speaker 1>lot of money back then sixt and and you can

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<v Speaker 1>use it to finance your your wars. And the quid

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<v Speaker 1>pro quo was that they would be able to issue money.

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<v Speaker 1>So they were the first sort of official issuer of

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<v Speaker 1>bank notes because of you know, banks were at this

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<v Speaker 1>point we're issuing their own money, and they would be

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<v Speaker 1>the sole banker to the government. And because of this

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<v Speaker 1>status that it gave them this credibility within the city

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<v Speaker 1>and so they sort of effectively amassed power over over

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<v Speaker 1>time as a smaller banks would use them, and slowly

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<v Speaker 1>came this kind of central bank inasmuch as it was

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<v Speaker 1>a supporter of the financial system and other banks in

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<v Speaker 1>the city. I know that originally the bank notes were handwritten,

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<v Speaker 1>and that did evolve because from twenty five they then

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<v Speaker 1>started issuing bank notes in increments of ten pounds from

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<v Speaker 1>twenty to ninety and then when France declared war on

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<v Speaker 1>Britain in people started flocking to the bank to try

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<v Speaker 1>and swap these bank notes into gold, which was possible

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<v Speaker 1>at the time because and it was until the end

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<v Speaker 1>of the gold standard, and the amount of gold that

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<v Speaker 1>was held from the bank at that time dropped from

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<v Speaker 1>sixteen million pounds to two million pounds, so it was

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<v Speaker 1>a big problem. The Prime Minister at the time, William

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<v Speaker 1>Pitt the Younger, put a Privy Council order on the

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<v Speaker 1>Bank of England. He ordered it to stop paying notes

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<v Speaker 1>on gold. And because of this cartoon of pit trying

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<v Speaker 1>to woo the gold off an old lady who represented

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<v Speaker 1>the Bank of England to help fund the war in France,

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<v Speaker 1>the Bank of England got its nickname the Old Lady

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<v Speaker 1>of thread Needle Street. At the big moment in our

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<v Speaker 1>kind of recent memory, of course, was the brand new

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<v Speaker 1>labor government of Tony Blair and Gordon Brown, and Brown

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<v Speaker 1>surprised everyone, didn't he by announcing independence. We kind of

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<v Speaker 1>assume now that central bank independence is this given this orthodoxy,

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<v Speaker 1>but it wasn't always like that, and as recently as

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<v Speaker 1>before the government was actually setting interest rates. Right, and

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<v Speaker 1>you've both been covering the bank for a while, how

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<v Speaker 1>significant was that moment, and you describe what it was

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<v Speaker 1>like for the city or for the markets as well.

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<v Speaker 1>To hear that, I have to say I was not

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<v Speaker 1>covering it in but I hear that it absolutely stunned

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<v Speaker 1>the financial markets. The headlines read set the old Lady

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<v Speaker 1>set free and it was days after Gordon Brown took office.

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<v Speaker 1>So it absolutely transformed monetary policy in the UK because

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<v Speaker 1>it took the politics out of rate setting, which is

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<v Speaker 1>different to budgets, right, because there's likely to be this

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<v Speaker 1>spending spree in the run up to an election where

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<v Speaker 1>you couldn't do the same with interest rates anymore. And

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<v Speaker 1>former Bank of England Governor Mervin King said that it

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<v Speaker 1>actually helped to improve the relationships between the Bank of

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<v Speaker 1>England and the Treasury, though given the state of the

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<v Speaker 1>relationship at the moment that might not be the case.

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<v Speaker 1>If it's trust in number ten right exactly. The process

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<v Speaker 1>of independence had been coming for a long time. The

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<v Speaker 1>shock really was was the fact that it happened so quickly,

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<v Speaker 1>and Gordon Brown was the first thing he did, but

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<v Speaker 1>it was pretty much the first thing he did well. First,

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<v Speaker 1>we have to remember that this was, as we were

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<v Speaker 1>just saying, it was a private bank and it was

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<v Speaker 1>nationalized after the Second World War effectively, and then it

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<v Speaker 1>was a nationalized sort of institution right up until we

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<v Speaker 1>had this. We had Black Wednesday in the e r

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<v Speaker 1>M crisis in the UK and that was the moment

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<v Speaker 1>we shifted to inflation targeting. After that, there was always

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<v Speaker 1>the plan to one day give the bank independence, to

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<v Speaker 1>separate the politics from interest rate setting, which is what

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<v Speaker 1>course inflation. Back then, as when our remembering was the

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<v Speaker 1>biggest threat to the economy, and so they wanted an

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<v Speaker 1>institution which could control inflation. But the bank just wasn't

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<v Speaker 1>in a position where it could it had the resources.

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<v Speaker 1>At that point. The treasury was full of the brains

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<v Speaker 1>and the bank was sort of thin on them. Nowadays,

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<v Speaker 1>you know, it's the bank that is the is the

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<v Speaker 1>sort of intellectual reserve of the UK economy and the

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<v Speaker 1>treasury is much thinner on the ground. And the things

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<v Speaker 1>that there was this shift and by they were ready effectively,

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<v Speaker 1>and then from then on in it became the idea

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<v Speaker 1>that actually we needed this institution to target inflation. But

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<v Speaker 1>so the banks built up a brain trusts. Gradually the

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<v Speaker 1>government split the Financial Services Authority out, so the prudential

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<v Speaker 1>regulation of the banks was removed from the Bank of England,

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<v Speaker 1>which obviously then became this catastrophic crisis in two thousand

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<v Speaker 1>and eight with the financial crisis, because the bank had

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<v Speaker 1>not had oversight of the financial system to the degree

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<v Speaker 1>that it it needed to have done. And obviously what

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<v Speaker 1>happened was the FSAY came back into the bank. But

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<v Speaker 1>but in that in those interfining years between two thousand

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<v Speaker 1>and the Bank built up a huge brain trust under

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<v Speaker 1>largely under Irvin King as governor and as as previously

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<v Speaker 1>as the Deputy Government the head of the sort of

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<v Speaker 1>monetary analysis. People accused him of neglecting the financial stability

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<v Speaker 1>side of the bank, but in that in the process

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<v Speaker 1>of doing so he did he did build up the

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<v Speaker 1>sort of economic expertise and that was one of his

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<v Speaker 1>strongest legacies. Actually, So the two thousand eight crisis you've mentioned,

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<v Speaker 1>that was obviously a huge test for the Bank and

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<v Speaker 1>central banks all around the world. Irvin King is at

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<v Speaker 1>the helm here in London trying to save the financial

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<v Speaker 1>system this idea of quantitative easing, of course, you know,

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<v Speaker 1>a new tool to try to stave off financial armageddon.

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<v Speaker 1>How did the Bank do throughout that process? Were they

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<v Speaker 1>kind of leading the world? Were they following the pack?

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<v Speaker 1>What was the kind of the scorecard of how they

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<v Speaker 1>managed to steer Britain through that? Amazingly, you didn't get

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<v Speaker 1>the inflation levels of the nineteen seventies that we're seeing now.

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<v Speaker 1>The independence of the Bank of England enabled it to

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<v Speaker 1>have this coordinated rate cup with the Fed in October

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<v Speaker 1>two thousand and eight that they wouldn't have been able

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<v Speaker 1>to do if the Bank hadn't been independent. And even

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<v Speaker 1>now critics of the Bank of England aren't calling for

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<v Speaker 1>its independence. But every time you listened to Andrew Bailey

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<v Speaker 1>come on the Treasury Select Committee and talk about how

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<v Speaker 1>the Bank of England's doing, he will refer back to

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<v Speaker 1>the financial crisis and how much the Bank has come

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<v Speaker 1>on in terms of ensuring financial stability, because that really

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<v Speaker 1>is a proud moment for him because he was running

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<v Speaker 1>that before he was the governor. So it's the kind

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<v Speaker 1>of finest hour was it If you go right back

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<v Speaker 1>to that's all the Bank of England did it ended

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<v Speaker 1>up being a sort of financial stability crisis. Yeah, the

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<v Speaker 1>backstopping the crisis because it was big enough and it

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<v Speaker 1>had that sort of core customer, which is the government,

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<v Speaker 1>and so it still had that role, but it hadn't

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<v Speaker 1>got the powers to supervise the bank. So it was

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<v Speaker 1>a bizarre separation of powers, which meant there was this

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<v Speaker 1>disjunction and then the financial crisis. Obviously we saw the

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<v Speaker 1>consequences of that. But then when Mervin King stepped down

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<v Speaker 1>or came to end of his turn, the bank looked

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<v Speaker 1>outside of Britain for the first time and they found

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<v Speaker 1>a certain Mark Arney, a very different sort of personality.

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<v Speaker 1>How did it go down? The bank became under him

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<v Speaker 1>a much sort of leaner business like operation. Of course,

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<v Speaker 1>one of the accusations at Mark Ny is that he

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<v Speaker 1>got way too political. He talked about Brexit in ways

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<v Speaker 1>which aggravated a lot of people within the Tory Party

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<v Speaker 1>of Brexit is causing short term volatility in the economic data,

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<v Speaker 1>and more fundamentally, it's creating a series of tensions in

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<v Speaker 1>the economy, tensions for business. And I guess one of

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<v Speaker 1>the legacies is there is this kind of lingering sense

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<v Speaker 1>that the Central Bank has overstepped because Mark Karney thought

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<v Speaker 1>it was his right and his duty to tell everyone

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<v Speaker 1>that breaks it was a terrible idea. There was this

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<v Speaker 1>huge tension with Mervin King and Gordon Brown previously because

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<v Speaker 1>Mervyn King had done something similar. He'd said that after

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<v Speaker 1>the financial crisis and there needed to be austerity and

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<v Speaker 1>obviously Gordon Brown had effectively felt like he was being

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<v Speaker 1>bounced to an austerity budget at some point because of

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<v Speaker 1>what Irvin King was saying, and he was he was

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<v Speaker 1>livid in private, but he couldn't say anything in public

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<v Speaker 1>against the Governor Markimland because this independent setup was his creation,

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<v Speaker 1>so he didn't want to undermine his own creation. He

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<v Speaker 1>then later did once he left, and once Mark Arnie

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<v Speaker 1>was there and he felt like he could free, he

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<v Speaker 1>was free, he could feel like he could write about it.

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<v Speaker 1>But and then you had Mark Connie was he was

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<v Speaker 1>just this sort of uber chief, exact type of manager

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<v Speaker 1>who not as intellectual on economics as Irvin King, but

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<v Speaker 1>a smooth operator. But the difference as well between Mark

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<v Speaker 1>Carney and Andrew Bailey is, yes, Mark Carney has been

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<v Speaker 1>was outspoken on Brexit and other issues. Andrew Bailey doesn't

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<v Speaker 1>seem to me to have been that outspoken, but he

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<v Speaker 1>does draw media attention for his communications because he tends

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<v Speaker 1>to you. He called for the restraint in wage bargaining,

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<v Speaker 1>so controversially he forgot how much he earns, and it's

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<v Speaker 1>more than half a million pounds. What was your play

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<v Speaker 1>over the same period, what was it? Um? That's somewhere

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<v Speaker 1>over five hundred and I can't tell you it's luckly

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<v Speaker 1>what it was. I didn't carry that around in my head.

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<v Speaker 1>I think including pension five hundred and seventy five, you

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<v Speaker 1>never got. With Carney, there would never be a gaff.

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<v Speaker 1>He has always went in super prepared. His team were

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<v Speaker 1>permanently exhausted because of the amount the demands that he

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<v Speaker 1>would put on them, so that he was briefed incredibly thoroughly.

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<v Speaker 1>That's not happening under barely. It's a more relaxed environment.

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<v Speaker 1>I saw him coming out obviously, were just right opposite

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<v Speaker 1>the Bank of England here and I walked past the

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<v Speaker 1>door the other evening and out he trotted with his briefcase.

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<v Speaker 1>And what I thought was remarkable is that no one

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<v Speaker 1>in the crowd batters an elix. He's been very anonymous.

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<v Speaker 1>You know Mark Carney emerged, there'd probably be sort of paparazzi,

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<v Speaker 1>but he was just just another city guy in his seat,

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<v Speaker 1>tottering off to the I often see him and I'm

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<v Speaker 1>stood in front of the Bank of England covering previewing

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<v Speaker 1>the decision at four am, and he'll not at quite

0:11:06.840 --> 0:11:09.280
<v Speaker 1>four am. He'll wander in at six maybe on b

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<v Speaker 1>O E day and no one bats an Island people.

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<v Speaker 1>But the best thing is a print journalist not covering

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<v Speaker 1>Mark Harney anymore? Is that Actually Andrew Bailey just speaks

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<v Speaker 1>in sentences instead of ever dividing subclauses. And it was

0:11:22.840 --> 0:11:28.440
<v Speaker 1>impossible cover Markney. You both those press conferences you can't

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<v Speaker 1>quite follow At the point is but what about now?

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<v Speaker 1>So they're getting it in the neck, aren't they? For

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<v Speaker 1>all sorts of things. We've got a spiraling inflation backdrop

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<v Speaker 1>here in the UK. Was Bailey late to raise interest rates?

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<v Speaker 1>I mean we've got ministers being critical, We've got former

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<v Speaker 1>Trade Secretary Lean Fox is called for an investigation, saying

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<v Speaker 1>it's consistently underestimated the threat of inflation. The Bank of

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<v Speaker 1>England persisted beyond any rational interpretation of the data to

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<v Speaker 1>tell us that inflation was transient, then it would pick

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<v Speaker 1>up five. They have consistently underestimate to the level of

0:12:03.559 --> 0:12:06.839
<v Speaker 1>the threat. Is that fair, phil and I did an

0:12:06.840 --> 0:12:10.000
<v Speaker 1>interview with Jagit Chater, the director of the National Institute

0:12:10.000 --> 0:12:12.160
<v Speaker 1>for Economic and Social Research, and I think he summed

0:12:12.200 --> 0:12:14.600
<v Speaker 1>up the view that we get from economists all around,

0:12:14.679 --> 0:12:18.520
<v Speaker 1>which is that the bank was strategically right but tactically

0:12:18.520 --> 0:12:22.320
<v Speaker 1>wrong in that it should have raised interest rates. Perhaps

0:12:22.400 --> 0:12:24.360
<v Speaker 1>it did it a month or too late, but had

0:12:24.360 --> 0:12:27.720
<v Speaker 1>it gone much sooner, it risked sparking a recession. And

0:12:27.760 --> 0:12:30.800
<v Speaker 1>it didn't know what the impact on unemployment would be

0:12:30.840 --> 0:12:32.839
<v Speaker 1>at the end of the furlough scheme because we've never

0:12:32.880 --> 0:12:35.960
<v Speaker 1>had a furlough scheme in the UK. So really, when

0:12:36.240 --> 0:12:39.120
<v Speaker 1>Conservative ministers are coming out and criticizing the Bank of

0:12:39.120 --> 0:12:42.239
<v Speaker 1>England for failing to do its job on inflation targeting,

0:12:42.559 --> 0:12:45.959
<v Speaker 1>it does seem politically convenient for them because it was

0:12:46.040 --> 0:12:49.160
<v Speaker 1>at the same moment when the government was being criticized

0:12:49.160 --> 0:12:52.559
<v Speaker 1>for not doing enough fiscally. But now in the Tory

0:12:52.640 --> 0:12:55.120
<v Speaker 1>leadership contest you have Rishi soon Like standing up for

0:12:55.160 --> 0:12:57.559
<v Speaker 1>the Bank of England, which seems a little ironic. I mean,

0:12:57.600 --> 0:13:00.840
<v Speaker 1>and you know, listening to Liz try to talk about

0:13:00.880 --> 0:13:05.040
<v Speaker 1>smashing up the economic orthodoxy, I mean, it's hard not

0:13:05.080 --> 0:13:07.120
<v Speaker 1>to read into that that what she means might be

0:13:07.600 --> 0:13:10.480
<v Speaker 1>the mandate of the Bank of England, the relationship the independence.

0:13:10.480 --> 0:13:12.760
<v Speaker 1>Do you think that's sending shivers down the spines of

0:13:12.800 --> 0:13:16.440
<v Speaker 1>everyone at thread Needle Street. Yeah, it's definitely unnerving them

0:13:16.440 --> 0:13:18.360
<v Speaker 1>because you don't know who you're I mean, ultimately, the

0:13:18.360 --> 0:13:21.280
<v Speaker 1>Treasury makes these decisions and you don't know what to

0:13:21.960 --> 0:13:24.600
<v Speaker 1>decisions theyre going to make. There is a sort of

0:13:24.960 --> 0:13:28.800
<v Speaker 1>separate argument going on in the financial regulation sphere, where

0:13:29.040 --> 0:13:31.680
<v Speaker 1>you know, the Treasury wants to have these call in

0:13:31.800 --> 0:13:34.199
<v Speaker 1>powers as it were, it seems, and which would give

0:13:34.280 --> 0:13:37.280
<v Speaker 1>them the right perhaps even in secret lires and even

0:13:37.320 --> 0:13:40.199
<v Speaker 1>issues about transparency about some of these potential powers which

0:13:40.200 --> 0:13:42.959
<v Speaker 1>they're talking about, to tell the regulator to change its

0:13:43.000 --> 0:13:46.280
<v Speaker 1>regulations just because it might suit some politicians. That is

0:13:46.360 --> 0:13:49.600
<v Speaker 1>absolutely the kind of thing which the banking and would

0:13:49.640 --> 0:13:52.120
<v Speaker 1>dread because it would have to be making policies, had

0:13:52.160 --> 0:13:54.839
<v Speaker 1>to be acting on policies which would be counter to

0:13:55.160 --> 0:13:59.320
<v Speaker 1>what it needs to do to maintain regulatory stability, and

0:13:59.480 --> 0:14:01.680
<v Speaker 1>it may not even be able to disclose the fact

0:14:01.720 --> 0:14:03.959
<v Speaker 1>that actually it's making stupid decisions because that's what the

0:14:03.960 --> 0:14:07.800
<v Speaker 1>politicians wanted to do. There are these real issues. And

0:14:07.960 --> 0:14:10.360
<v Speaker 1>again with monetary policy, if they changed the mandate, it's

0:14:10.400 --> 0:14:12.280
<v Speaker 1>hard to imagine that they would tear out the mandate

0:14:12.280 --> 0:14:15.720
<v Speaker 1>and we do something completely uniquely idiotic and in the

0:14:15.760 --> 0:14:19.440
<v Speaker 1>Western world. But conceivably it's possible. I don't think even

0:14:19.480 --> 0:14:21.240
<v Speaker 1>those trust knows how she would like to change the

0:14:21.240 --> 0:14:23.760
<v Speaker 1>Bank of England's mandate. You know, she referred to the

0:14:23.760 --> 0:14:26.640
<v Speaker 1>Bank of Japan is perhaps a source of inspiration, But

0:14:26.680 --> 0:14:28.480
<v Speaker 1>I think we need to look at the best practice

0:14:28.560 --> 0:14:31.479
<v Speaker 1>around the world, the countries who have been most successful

0:14:31.480 --> 0:14:35.320
<v Speaker 1>at controlling inflation, for example, the Bank of Japan. Does

0:14:35.360 --> 0:14:38.200
<v Speaker 1>she realize that deflation has been a problem in Japan?

0:14:38.320 --> 0:14:40.960
<v Speaker 1>I was going to ask about that. I mean, what's

0:14:40.960 --> 0:14:44.320
<v Speaker 1>she trying to do by drawing analogies between Britain and Japan.

0:14:44.400 --> 0:14:47.440
<v Speaker 1>I think that she's trying to pump up her impression

0:14:47.440 --> 0:14:50.520
<v Speaker 1>of Margaret Thatcher by referring to a monitorist theory. That's

0:14:50.560 --> 0:14:55.360
<v Speaker 1>the unforgiving view. The generous view would be that perhaps

0:14:55.400 --> 0:14:58.920
<v Speaker 1>she could change the target to nominal GDP, which is

0:14:58.920 --> 0:15:02.800
<v Speaker 1>not necessarily so radical. Even former Treasury Minister Jim O'Neill

0:15:02.920 --> 0:15:07.720
<v Speaker 1>was suggesting that. But when I speak to analysts macro strategists,

0:15:07.720 --> 0:15:10.600
<v Speaker 1>they say, changing the Bank of England's mandate in the

0:15:10.640 --> 0:15:14.360
<v Speaker 1>middle of a crisis, an inflation crisis, is only going

0:15:14.400 --> 0:15:17.520
<v Speaker 1>to add to the problem because of the instability, which

0:15:17.520 --> 0:15:19.600
<v Speaker 1>is just on the point of the political interference of

0:15:19.600 --> 0:15:21.760
<v Speaker 1>where it comes from. It's not really about should they

0:15:21.760 --> 0:15:23.960
<v Speaker 1>have raised rates a few months earlier? Is it's actually

0:15:23.960 --> 0:15:26.000
<v Speaker 1>I think more about the quantity of easing program because

0:15:26.040 --> 0:15:29.720
<v Speaker 1>they doubled the size of the Bank's que program um.

0:15:29.760 --> 0:15:33.160
<v Speaker 1>And so the criticism is probably a lesson should you

0:15:33.200 --> 0:15:35.760
<v Speaker 1>have raised rates in July? And like we were talking

0:15:35.800 --> 0:15:38.080
<v Speaker 1>about with and more too much money? Did you just

0:15:38.080 --> 0:15:40.640
<v Speaker 1>print too much money? Um? And I think it's the

0:15:40.640 --> 0:15:43.360
<v Speaker 1>criticisms are coalescing around that and as we go for

0:15:43.480 --> 0:15:46.280
<v Speaker 1>its depending on who I suppose is sitting in Downing

0:15:46.320 --> 0:15:48.480
<v Speaker 1>Street from September and who the Chancellor is and what

0:15:48.560 --> 0:15:50.920
<v Speaker 1>the mandate it continues to be the Bank of England,

0:15:51.440 --> 0:15:53.920
<v Speaker 1>What do you expect Bailey to do as the year

0:15:54.000 --> 0:15:57.760
<v Speaker 1>pans out with the backdrop of the inflation spiraling that

0:15:57.840 --> 0:16:01.560
<v Speaker 1>we've got with the economic head where with this huge

0:16:01.560 --> 0:16:04.120
<v Speaker 1>balance sheet that the bank's got to deal with, how's

0:16:04.120 --> 0:16:05.920
<v Speaker 1>it going to play this in the coming months. They

0:16:05.920 --> 0:16:09.000
<v Speaker 1>are obviously going to be raising rates this This is

0:16:09.120 --> 0:16:12.360
<v Speaker 1>supposedly going to be the first ever half point interest

0:16:12.440 --> 0:16:15.120
<v Speaker 1>rate hike in early August. They're also going to be

0:16:15.160 --> 0:16:18.160
<v Speaker 1>the potentially the first central bank in the world to

0:16:18.280 --> 0:16:21.800
<v Speaker 1>do active quantitative tightening, So active quantity of tightenings where

0:16:21.800 --> 0:16:24.320
<v Speaker 1>you actively sell the guilt that you brought through the

0:16:24.360 --> 0:16:26.720
<v Speaker 1>quantity of using program rather than just letting the mature

0:16:26.760 --> 0:16:28.920
<v Speaker 1>and just sort of drop off the balance sheet. Rather

0:16:29.000 --> 0:16:31.680
<v Speaker 1>interferes with the process of the government raising debt to

0:16:31.800 --> 0:16:35.480
<v Speaker 1>pay for whatever this trust might want to raise debt for.

0:16:35.720 --> 0:16:38.720
<v Speaker 1>But they have emphasized that that is not the active tool,

0:16:38.800 --> 0:16:41.720
<v Speaker 1>So don't read too much into the active quantitative tightening.

0:16:42.120 --> 0:16:44.880
<v Speaker 1>It is another mechanism by which you raise interest rates

0:16:44.920 --> 0:16:46.880
<v Speaker 1>alongside the more traditional and their ahead of the pack

0:16:46.920 --> 0:16:49.120
<v Speaker 1>on this, you say central bank in the world to

0:16:49.200 --> 0:16:52.960
<v Speaker 1>consider if the yeah, yeah, they've got to actually do

0:16:53.000 --> 0:16:54.840
<v Speaker 1>it to be the first and it is the guilt

0:16:54.840 --> 0:16:56.960
<v Speaker 1>market ready for it. It's actually gonna be quite complicated

0:16:56.960 --> 0:16:58.920
<v Speaker 1>because the last thing you want to do is completely

0:16:58.920 --> 0:17:01.960
<v Speaker 1>mess up markets and then cause borrowing costs to us

0:17:03.400 --> 0:17:05.000
<v Speaker 1>if you, yeah, by doing it at the Bank of

0:17:05.000 --> 0:17:08.719
<v Speaker 1>England and then really annoying your paymasters at the Treasury,

0:17:08.760 --> 0:17:11.320
<v Speaker 1>that's only going to encourage them to say this mandate

0:17:11.359 --> 0:17:12.879
<v Speaker 1>needs to be changed and these guys need to be

0:17:12.920 --> 0:17:16.040
<v Speaker 1>pulled into line. Say it's it's a very tricky times,

0:17:16.040 --> 0:17:19.600
<v Speaker 1>the first time since they got independence where they actually

0:17:19.640 --> 0:17:23.120
<v Speaker 1>are working against the politicians. So the politicians are going

0:17:23.160 --> 0:17:25.760
<v Speaker 1>to in terms of the economy is going to be

0:17:25.800 --> 0:17:28.959
<v Speaker 1>actively tightened. They may actively have to cause unemployment, name

0:17:29.240 --> 0:17:31.480
<v Speaker 1>may actively have to tip the economy into recession to

0:17:31.480 --> 0:17:36.200
<v Speaker 1>control inflation. And everything they've done since has been relatively easy.

0:17:36.480 --> 0:17:38.160
<v Speaker 1>This is the first time that there is a real

0:17:38.280 --> 0:17:40.800
<v Speaker 1>tension and if if they do do that, or if

0:17:40.840 --> 0:17:42.919
<v Speaker 1>the fingers are blaming can be pointed at them for

0:17:42.960 --> 0:17:46.320
<v Speaker 1>increasing unemployment. I mean, you can imagine certainly if there's

0:17:46.320 --> 0:17:49.800
<v Speaker 1>trusses in Downing Street from September that the noises get

0:17:49.800 --> 0:17:51.440
<v Speaker 1>more intense, right, that they're going to be blamed for

0:17:51.520 --> 0:17:54.160
<v Speaker 1>all the economic problems of the government's Yeah, but it's

0:17:54.160 --> 0:17:57.480
<v Speaker 1>an easy goal to score for people who don't understand economics.

0:17:57.600 --> 0:17:59.920
<v Speaker 1>I think that you asked, how would the Bank of

0:18:00.000 --> 0:18:02.640
<v Speaker 1>England be responding to the next Prime minister. We're assuming

0:18:02.640 --> 0:18:04.240
<v Speaker 1>that the next Prime Minister is going to be Lows.

0:18:04.240 --> 0:18:07.120
<v Speaker 1>Trust If it's Riscie sooner, I think things will move

0:18:07.119 --> 0:18:09.760
<v Speaker 1>along quite comfortably because she has been defending the Bank

0:18:09.800 --> 0:18:12.520
<v Speaker 1>of England not just in terms of the need for independence,

0:18:12.520 --> 0:18:14.600
<v Speaker 1>not to change the mandate, but also on its inflation

0:18:14.640 --> 0:18:17.320
<v Speaker 1>fighting record, because he's worked so closely with them through

0:18:17.359 --> 0:18:21.480
<v Speaker 1>the pandemic crisis. Liz called him a bean counter. That

0:18:21.640 --> 0:18:27.960
<v Speaker 1>was interesting, insulting a former Conservative chancellor. That's the politics

0:18:27.960 --> 0:18:32.159
<v Speaker 1>that we're in at the moment, isn't it insult What

0:18:32.280 --> 0:18:37.240
<v Speaker 1>is it now? I failed my Matt's ailable trust me

0:18:37.359 --> 0:18:45.760
<v Speaker 1>with the nation's finances. Thanks for listening to this week's

0:18:45.800 --> 0:18:48.000
<v Speaker 1>In the City. We'll be back next week for a

0:18:48.000 --> 0:18:50.040
<v Speaker 1>look at what's in store for the City of London's

0:18:50.160 --> 0:18:52.760
<v Speaker 1>job market. But in the meantime, if you like our show,

0:18:52.800 --> 0:18:55.439
<v Speaker 1>please head on over to Apple Podcasts or wherever you

0:18:55.480 --> 0:18:59.080
<v Speaker 1>listen to your podcasts and rate, review and subscribe. This

0:18:59.119 --> 0:19:02.320
<v Speaker 1>episode was host did by me David Merritt and produced

0:19:02.320 --> 0:19:06.199
<v Speaker 1>by Summersadi and Elena Ganatra. Special thanks to Phil Audrick

0:19:06.560 --> 0:19:13.200
<v Speaker 1>and Lizzie Burden h