Mark Carney is gambling with his credibility

Risky, risky, risky.

In a dramatic break with history, at his first meeting as Governor,  Mark Carney persuaded the Bank of England’s, (BOE), Monetary Policy Committee, (MPC), to issue what amounted to forward guidance on the path of future monetary policy.

The key sentence in the statement issued by the MPC was, "The, (recently observed), significant upward movement in market interest rates, would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy".

There are arguments against, and arguments in favour of forward guidance. Against the guidance ties the committee’s hands and will make it look stupid if it subsequently has to adapt it too quickly, (almost by definition), and if it does have to change the message, that’s going to lead to ever-diminishing credibility for future guidance, i.e. the market will remember the committee’s ‘mistakes’ and not believe future guidance.

For: it represents "costless" intervention, in the narrow sense that the central bank doesn’t have to actually DO anything right now and, if the guidance does have to change direction later, then that will probably be because the initial guidance has done its work - having lead to the desired economic adjustment.

The substance of today’s messages from both the BOE and the European Central Bank, (ECB), which used a similar tactic, was that they had seen their yield curves steepen dramatically since the market became obsessed with "tapering" in the US-the process by which the Fed may wind down its programme of Quantitative Easing, and that they could neither understand this phenomenon nor stand idly by and watch it happen. To paraphrase their message- "never mind the US, or the Fed, look at our economies and ask yourself, why would you expect us to raise rates any sooner now than you did two months ago". Fair enough and, in the ECB’s case, a very good point.

However, I think Carney has started his encumbency with a very risky gamble. Whilst the Eurozone economy has been flatlining and boasts economies best described as ranging from zombie to plunging, the UK economic data has recently given us some distinctly pleasant surprises - the latest being the Services Purchasing Managers’ Index-representing a massive sector of the economy- and quite a robust housing market recovery. Let us also not forget that UK inflation remains stubbornly high and shows no real tendency to fall. Maybe not today, maybe not tomorrow, but probably by Christmas, I think the BOE will have to subtly change today’s attempt at guidance and investors who bought gilts on the back of today’s BOE statement may come to regret that before long.

Bank of England Governor, Mark Carney. Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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As the Gaslighter-in-Chief takes office, remember: you're not going mad

Why do I feel so angry and anxious about Donald Trump? Because I've seen what happens when you can't trust your own mind.

This might sound strange, but it was on a psychiatric ward that I first gained one of the most important insights into covering politics. I must have been no more than 12: I was there to visit a relative who had been sectioned after putting his hand through a window. He was convinced that the local newspaper had a front-page news story mocking him. My dad brought him a copy of the paper to show that wasn’t true. “They must have changed it,” came the stark response.

It was then I realised: your mind can lie to you. And losing your grip on reality is like being trapped down a well with sides made of slippery, moss-covered stones. Where are the handholds to pull yourself out? You can no longer trust what you hear, what you see, what you think you know. There is no evidence that can change your mind.

Our acknowledgement that this feeling is frightening partly explains the strong social taboo against lying in politics. Do politicians lie any more than normal people? Probably not. But their lies have traditionally been more stigmatised – for good reason. Any discussion of politics relies on basic agreed facts, from which flow a common reality. It’s why the experience of being lied to is so disorienting. You begin to question yourself: did that really happen? Do I know what I think I know?

I remembered that moment when I first saw Donald Trump deny that he had ever “mocked” a disabled reporter. A lie that brazen induces a kind of mental vertigo. I saw him do it. I saw the video! During the US election I saw him standing up in front of a crowd at a rally in South Carolina and say: “Now, the poor guy, you ought to see this guy.” Then he bent his hands in at the wrists, jerking wildly, adding: “Ah, I don’t know what I said! Ah, I don’t remember.”

The impression was a textbook example of what my school playground would have called a “spastic”. The reporter in question, Serge Kovaleski of the New York Times, has a disease called arthrogryposis, in which his joints contract, bending his wrists.

Immediately after the incident, Trump claimed: “I have no idea who this reporter . . . is, what he looks like or his level of intelligence. Despite having one of the all-time great memories, I certainly do not remember him.” (Let us pause briefly to note Trump’s casual and telling conflation of physical and mental disability.) Unfortunately, Kovaleski tells a different story. “Donald and I were on a first-name basis for years,” he said. “I’ve interviewed him in his office.”

For the past few months, I’ve been asking myself why, exactly, the election of Donald Trump has made me so angry and anxious. Is it because I hate democracy, because I think working-class voters are stupid, that I am a swan-eating metropolitan who wouldn’t go outside the M25 if my life depended on it? (No, no and no. Come on, guys, I sometimes go to Brighton!)  I think it’s because that moment on the psychiatric ward – and seeing several loved ones suffer mental illness since – taught me that drowning in your own mind, unable to climb out, is an almost indescribably horrific experience. So what kind of person inflicts that on others by wilfully distorting reality for their own political gain? It is cruelty. I’m in charge, and let me tell you: you don’t know what you think you know. I didn’t mock that reporter you saw me mocking. I didn’t even know he was disabled. I don’t remember him. What kind of politician deliberately makes his audience feel as though they are losing their minds?

I’ve written before about “gaslighting” one of those internet-friendly buzzwords that normally make me flinch. It’s what happened to the families of the Hillsborough dead, where their grief was compounded by the message that their sons and daughters, sisters and brothers, had brought it on themselves. It’s what happens in abusive relationships, where the victim’s sense of self is slowly chipped away until they internalise the lie that “he only hits me because I make him so angry”. It’s what happens in America when a police officer fires shots into a black man’s back and the community is told it was self-defence.

That was why Meryl Streep’s speech at the Golden Globes was so powerful – and why Trump’s itchy Twitter finger served up a swift reply. We longed to see our version of reality reassert itself. “There was one performance this year that stunned me,” said Streep, collecting a lifetime achievement award. “It was effective and it did its job. It made its intended audience laugh and show their teeth. It was that moment when the person asking to sit in the most respected seat in our country imitated a disabled reporter, someone he outranked in privilege, power, and the capacity to fight back. It kind of broke my heart when I saw it.”

Streep called on her audience of movie stars – the kind of people Trump hates, except for when they offer him a cameo in Home Alone 2 – to stand up to this kind of bullying, and to defend journalists’ ability to “safeguard the truth”.

Inevitably, Trump responded in his usual thin-skinned way. He called Streep “one of the most over-rated actresses in Hollywood” and added: “For the 100th time, I never ‘mocked’ a disabled reporter (would never do that) but simply showed him ‘groveling’ when he totally changed a 16 year old story that he had written in order to make me look bad. Just more very dishonest media!” So brace yourself. This is what we should expect for the next four years. All hail the Gaslighter-in-Chief.

History is written by the winners, and now we can see a false narrative being built in real time, tweet by tweet. Yet those of us who understand even a little how painful it is to be a prisoner of your own mind have to remind each other: no matter what he says, we still know what we know.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge