One of the architects of New Labour’s fearsome Nineties spin machine, Alastair Campbell once said that by the time politicians and press officers are fed up to the back teeth with repeating a message, that’s about when it is beginning to reach the wider audience.
The Bank of England’s monetary policy committee has taken a leaf out of New Labour’s pager-clutching heyday with a succession of interviews across print and screen all saying the same thing — that market expectations of rate rises in the spring of next year are “reasonable”. Interest rate rises, when they come, will be “limited and gradual”. Et cetera, et cetera.
They were so on-message that it is difficult not to imagine them being drilled in the bowels of Threadneedle Street by some spin commissar and sent out with the deliberate intention of being boring. Repetition, rhetoric and rebuttal — never letting attacks go unanswered — were the three ‘R’s of the New Labour playbook. On the first two counts at least, the Bank has taken the strictures of the Millbank machine to heart.
On the independent MPC, only Martin Weale has expressed any kind of dissent eight months into Mark Carney’s governorship, when he called for a more stringent inflation knockout for the present forward guidance regime. It seems ironic then that his predecessor Lord King was labelled “Old Iron Fist” by external MPC member Danny Blanchflower, when dissent and minority votes were far more common under the ancien regime.
I’m not a subscriber to conspiracy theories suggesting the Canadian is stifling the MPC. Nor do these highly intelligent people check their brains in at the door when they head into the octagonal committee meeting room. And if you read between the lines, there have also been some hints of disagreement within the deluge of conformity that reveal old fault lines don’t run far below the surface. Serial dove David Miles said that it is possible there is more slack in the economy than the 1%-1.5% estimated by the committee.
On the other side of the policy divide, Ben Broadbent has fretted that the UK may never recover the lost productivity in the recession. Weale “can’t rule out” an earlier move on rates if wages pick up more quickly than expected.
But it doesn’t take long before the pager bleeps and they’re back on the same script. You’re forced into reading the tea leaves because the MPC has signed up to guidance: until 7% unemployment is reached, there’s a united front, when perhaps we should be having a more explicit discussion about the level of interest rates as the UK moves onto a firmer recovery footing. There may indeed be an unusual degree of consensus about the state of the economy, but we need a maverick or two on that committee challenging the consensus, otherwise why bother?
This is about more than craving a few good monetary policy rows after months of agreement (OK, maybe there’s a bit of that). The problem I also have with the robotic repetition is that the repeated talk about the timing of possible interest rate rises stokes an impression of certainty, when the caveats — “based on what we know” etc — never get reported. Remember, all this is coming after the Bank has just put in what is surely its most catastrophic forecasting performance ever on unemployment, which has fallen far more quickly than expected.
Yes, other forecasters got it wrong as well as Threadneedle Street, but judging on its August forecasts, we shouldn’t even have been having a discussion about when interest rates go up until the middle of 2016.
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So far, slowing inflation has given the MPC some handy cover, but things can change quickly. Look at the Ukraine crisis and its potential to push up oil and wheat costs, maybe feeding into the cost of living. If that happens, and the strength of January pay deals continues without much evidence of rising productivity, some MPC members will be voting for higher rates before too long. And that will make the current spin operation look very silly indeed.
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