Baptism of fire for Carney as global economy moves up through the gears

The minutes of his first meeting.

The minutes of his first Bank of England MPC meeting reveal that the urbane Governor Carney in fact had quite a baptism of fire, having to preside over a meeting riven by dissent, which was very significant, tending to suggest that the MPC's commitment to keep rates "low, for longer", is weaker than first thought.

First of all, there was a bombshell line in the minutes, revealing some sympathy with market rate hike expectations. Governor Carney had previously tried to persuade the market to flatten the yield curve, labelling the market’s expectations for the quantum and timing for rate rises as "unwarranted", but we now discover that this view was by no means unanimous on the committee:

"Other (MPC) members did not think market interest rates were obviously out of line with their view of the outlook."

Yet more dissent came from MPC member Weale, who objected to the 18 to 24 months horizon embodied in one of the "knockouts" that would cause the Bank to raise rates before unemployment reaches the 7 per cent threshold. He felt that the 18 to 24 months horizon was too long, i.e. the Bank will be prepared to ignore a blip in inflation if it thinks it’ll be back below 2.5 per cent within two years, (oh yes, the Bank’s inflation target has effectively now surreptitiously risen to 2.5 per cent, rather than 2 per cent). "One member, while accepting the principles of forward guidance, saw a particularly compelling need to do more to manage the risk that forward guidance could lead to an increase in medium-term inflation expectations, by setting an even shorter time horizon; that would make clear that the forward guidance was fully compatible with the Committee’s commitment to meeting the 2 per cent inflation target in the medium term."

Evidence seems to be mounting that global economic activity seems finally to be accelerating-maybe even creating a more classically rapid recovery, as opposed to the rather anaemic variety we have so far enjoyed.

UK economic data is already on a roll, with significant recent positive surprises from employment and weekly earnings, Purchasing Managers’ Indices, (Manufacturing, Construction and Services), Industrial Production, the Trade Balance, and  of course, Housing Indicators. As for the US, the July unemployment report may have been a tad disappointing, but forward-looking indicators such as the ISM surveys, (both Manufacturing and Non-manufacturing), have recently exceeded expectations, retail sales look healthy, and the latest jobless claims figures were very good news.

Even the poor old Eurozone has managed to crawl out of recession, and China has become more supportive of growth. For example, China Daily yesterday noted that Beijing authorities are aiming to boost the consumption of information products and services. China’s consumption of information products and services is expected to grow at an annual pace of at least 20 per cent to reach CNY3.2 trn ($518 bn) by the end of 2015, according to a guideline released by the State Council yesterday. In another positive sign, China’s industrial power usage rose to a one-year high in July.

All of this means that bond markets are set to remain on the ropes, testing and pushing through recent highs in yields, returning to the sort of standard risk premia that normally determine the levels of long-term rates, as opposed to the search for safe-havens which has driven markets since the crisis broke.

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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Owen Smith is naïve if he thinks misogynist abuse in Labour started with Jeremy Corbyn

“We didn’t have this sort of abuse before Jeremy Corbyn became the leader.”

Owen Smith, the MP challenging Jeremy Corbyn in the Labour leadership contest, has told BBC News that the party’s nastier side is a result of its leader.

He said:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.

“It’s now become something that is being talked about on television, on radio, and in newspapers. And Angela is right, it has been effectively licenced within the last nine months.

“We’re the Labour party. We’ve got to be about fairness, and tolerance, and equality. It’s in our DNA. So for us to be reduced to this infighting is awful. Now, I understand why people feel passionately about the future of our party – I feel passionately about that. I feel we’re in danger of splitting and being destroyed.

“But we can’t tolerate it. And it isn’t good enough for Jeremy simply to say he has threats too. Well, I’ve had death threats, I’ve had threats too, but I’m telling him, it’s got to be stamped out. We’ve got to have zero tolerance of this in the Labour party.”

While Smith’s conclusion is correct, his analysis is worryingly wrong.

Whether it is out of incompetence or an unwillingness to see the extent of the situation, Corbyn has done very little to stamp out abuse in his party, which has thus been allowed to escalate. It is fair enough of Smith to criticise him for his failure to stem the flow and punish the perpetrators.

It is also reasonable to condemn Corbyn's inability to stop allies like Chancellor John McDonnell and Unite leader Len McCluskey using violent language (“lynch mob”, “fucking useless”, etc) about their opponents, which feeds into the aggressive atmosphere. Though, as I’ve written before, Labour politicians on all sides have a duty to watch their words.

But it’s when we see how Smith came to the point of urging Corbyn to take more responsibility that we should worry. Smith confidently argues that there wasn’t “this sort of abuse and intolerance, misogyny, antisemitism” in the party before Corbyn was voted in. (I assume when he says “this sort”, he means online, death threats, letters, and abuse at protests. The sort that has been high-profile recently).

This is naïve. Anyone involved in Labour politics – or anything close to it – for longer than Corbyn’s leadership could tell Smith that misogyny and antisemitism have been around for a pretty long time. Perhaps because Smith isn’t the prime target, he hasn’t been paying close enough attention. Sexism wasn’t just invented nine months ago, and we shouldn’t let the belief set in that it did – then it simply becomes a useful tool for Corbyn’s detractors to bash him with, rather than a longstanding, structural problem to solve.

Smith's lament that “it’s now become something that is being talked about” is also jarring. Isnt it a good thing that such abuse is now being called out so publicly, and closely scrutinised by the media?

In my eyes, this is a bit like the argument that Corbyn has lost Labour’s heartlands. No, he hasn’t. They have been slowly slipping away for years – and we all noticed when Labour took a beating in the last general election (way before Corbyn had anything to do with the Labour leadership). As with the abuse, Corbyn hasn’t done much to address this, and his inaction has therefore exacerbated it. But if we tell ourselves that it started with him, then we’re grasping for a very, very simple solution (remove Corbyn = automatic win in the North, and immediate erasure of misogyny and antisemitism) to a problem we have catastrophically failed to analyse.

Anoosh Chakelian is deputy web editor at the New Statesman.