Mark Carney is taking the Bank of England (BoE) on tour.
The central bank governor and his most senior deputies are heading on a group trip away from their headquarters in London’s financial district this week and into the UK’s industrial heartland.
With a third of the British public unable correctly to identify the BoE as the institution that sets interest rates, and many others unhappy that monetary policy hasn’t helped them, the excursions are a chance for Carney to try to win the confidence of the population.
It’s an appropriate time for such unprecedented visits, just after Prime Minister Theresa May added her voice to the criticism of loose monetary policy by saying it has had “bad side effects.” Those comments, interpreted by some as an attack on the central bank, compound a controversial year for Carney in which he’s been accused of political bias for remarks around the British vote to leave the European Union.
“The Bank of England is clearly open to thinking outside the box, but you do wonder how that feeds back into policy,” said James Rossiter, an economist at TD Securities and a former Bank of England official. “The skeptic would say this is just a public-relations trip to try and boost confidence in the low- rate environment, but hopefully they’ll listen and hopefully they’ll take something away from it.”
The Future Forum, this Friday, will see Carney, deputy governors Ben Broadbent, Jon Cunliffe, Minouche Shafik and Sam Woods, as well as Chief Operating Officer Charlotte Hogg, address business people, charities and the public in Birmingham, Derby, Dudley, Leicester and Nottingham. After the individual meetings, the group will get back together again in Birmingham, the UK’s second largest city, for an event at the town hall.
In its own words, the bank is having the roadshow because to do its job, it “must be widely understood and trusted to do the right thing.”
That message has become harder to convey after the Brexit decision. Four of the five areas the BoE is visiting voted to quit the EU, with only Leicester voting to remain.
The BoE was condemned for talking down the economy with pre-referendum warnings of a recession. It may also have to address concern that by bolstering stimulus after the vote, it risks hurting savers while boosting asset prices.
“The direct effects are going to benefit some groups more than others,” Michael Saunders, an external member of the central bank’s Monetary Policy Committee, told UK lawmakers yesterday. “If we were to keep rates higher to make life easier for people with savings income, the economy would be weaker, unemployment would be higher.”
The central bank’s own quarterly survey shows net satisfaction with its performance at 34%, well below where it was early this century.
Just 65% of respondents correctly identified the BoE as the group that sets interest rates, with 15% saying the task is done by the government and 13% having no idea.
Among the topics on the agenda for the forum is what the BoE can do to “support the most vulnerable.” That’s an issue Chief Economist Andy Haldane addressed this year in a speech in Port Talbot, Wales, where the steel industry and thousands of jobs are at risk. While the economy has - in aggregate - regained its recession losses, Haldane said the recovery “for most has been slow and low, for many partial and patchy and for some invisible and incomplete.”
For those invited to the events, it’s a chance to engage directly with the three-century-old institution on such issues.
While individual Monetary Policy Committee members often meet with local businesses and representatives outside London, this week’s format is a first, and reflects the actions of a governor who’s overhauled everything from the BOE’s operations to its policy-making machinery.
Carney and his officials may also find themselves explaining the extent of their independence from the government.
The governor’s comments on the Brexit vote and the prime minister’s remarks on the consequences of BoE policy might have muddied that terrain.
“I’m not aware of all of the Bank of England staff at a senior level coming to any region en masse,” said Richard Butler, director for the West Midlands at the Confederation of British Industry. “It’s quite an encouraging development, because the bank is looking beyond its sole role to say, ‘Look, what else can we do?”