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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Progressive voters must ditch party differences to gain a voice in Brexit Britain

It's time for politicians and activists to put aside their tribal loyalties.

The status quo has broken. British politics lies shattered into pieces, and even Brexiteers look stunned. We are in a new landscape. Anyone who tells you they have the measure of it is lying; but anyone reaching for old certainties is most likely to be wrong.
 
Through this fog, we can already glimpse some signposts. There will be a leadership election in the Tory Party within three months. While it is still unclear who will win, the smart money is on a champion of Brexit. The Leave camp are in the ascendancy, and have captured the hearts of most Tory members and voters.
 
The next Conservative prime minister will lack a clear mandate from voters, but will need one to successfully negotiate our exit from the EU. They will also see a golden opportunity to capture the working-class Leave vote from Labour – and to forge an even more dominant Conservative electoral coalition. UKIP too would fancy their chances of dismembering Labour in the north; their financier Arron Banks now has almost a million new registered supporters signed up through Leave.EU.
 
In this context, it seems inevitable that there will be another general election within six to twelve months. Could Labour win this election? Split, demoralised and flailing, it has barely begun to renew, and now faces a massive undertow from its heartlands. In this time of crisis, a party divided will find it difficult to prevail – no matter who leads it. And amidst all today’s talk of coups against Corbyn, it is currently tough to envisage a leader who could unite Labour to beat the Brexiteers.  
 
From opposite ends of the political spectrum, I and my Crowdpac co-founder Steve Hilton have been testing the possibilities of new politics for years. In this referendum I supported Another Europe Is Possible’s call to vote In and change Europe. But it is crystal clear that the Leave campaigns learnt many of the lessons of new politics, and are well positioned to apply them in the months and years to come. I expect them to make significant use of our platform for crowdfunding and candidate selection.

Time to build a progressive alliance

On the other side, the best or only prospect for victory in the onrushing general election could be a broad progressive alliance or national unity platform of citizens and parties from the centre to the left. Such an idea has been floated before, and usually founders on the rocks of party tribalism. But the stakes have never been this high, and the Achilles heels of the status quo parties have never been so spotlit.
 
Such an alliance could only succeed if it embraces the lessons of new politics and establishes itself on open principles. A coalition of sore losers from Westminster is unlikely to appeal. But if an open primary was held in every constituency to select the best progressive candidate, that would provide unprecedented democratic legitimacy and channel a wave of bottom-up energy into this new alliance as well as its constituent parties.
 
In England, such an alliance could gather together many of those who have campaigned together for Remain in this referendum and opposed Tory policies, from Labour to Greens and Liberal Democrats. It might even appeal to Conservative voters or politicians who are disenchanted with the Leave movement. In Scotland and Wales too, some form of engagement with the SNP or Plaid Cymru might be possible.
 
An electoral alliance built on open and democratic foundations would provide a new entry point to politics for the millions of young people who voted to stay in the EU and today feel despairing and unheard. Vitally, it could also make a fresh offer to Labour heartland voters, enabling them to elect candidates who are free to speak to their concerns on immigration as well as economic insecurity. I believe it could win a thumping majority.

A one-off renegotiation force

A central goal of this alliance would be to re-negotiate our relationship with Europe on terms which protect our economy, workers’ rights, and the interests of citizens and communities across the country. Work would be needed to forge a common agenda on economic strategy, public services and democratic reform, but that looks more achievable than ever as of today. On more divisive issues like immigration, alliance MPs could be given flexibility to decide their own position, while sticking to some vital common principles.
 
This idea has bubbled to the surface again and again today in conversations with campaigners and politicians of different parties and of none. What’s more, only a new alliance of this kind has any prospect of securing support from the new network movements which I helped to build, and which now have many more members than the parties. So this is no idle thought experiment; and it surely holds out greater hope than another rearranging of the deckchairs in the Parliamentary Labour Party.
 
The alliance would probably not last in this form beyond one parliamentary term. But during that time it could navigate us safely through these turbulent referendum seas, and lay foundations for a better country and a better politics in the coming decades. Food for thought, perhaps.
 
Paul Hilder is co-founder of Crowdpac, 38 Degrees and openDemocracy. He has played leadership roles at Change.org, Avaaz and Oxfam, and was a candidate for general secretary of Labour in 2011. 

Paul Hilder is an expert on new politics and social change. He is the Executive Director of Here Now, a movement lab working with partners around the world. He co-founded 38 Degrees and openDemocracy, helped launch Avaaz.org and served as Vice-President of Global Campaigns at Change.org. He has worked on social change in the UK and around the world, including in the political arena and with Oxfam and the Young Foundation.