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Stewart Cowley: letter to Mark Carney

by Stewart Cowley on Jul 04, 2014 at 10:25

I know it’s a bit 80’s, but one really doesn’t have to look much further than our pathetic levels of broad money supply growth to understand the UK economy.

Without credit growth capitalism can’t survive or flourish. In your shoes I’d let everybody know that interest rates aren’t moving until this gets going.

Stop talking up the pound

From the moment you arrived at the Bank the pound started to appreciate. Call it coincidence or call it causality but it’s now getting slightly embarrassing and, what’s more, having uncomfortable effects.

It’s holding back the stock market for one thing – so much of our earnings come from abroad and it does nothing for how people view our companies if their profits are being whittled away by a rising pound.

A couple of soothing words – the antidote to the ones delivered at the Mansion House which sent sterling up 1.5cents during the Brazil v Croatia match! – would be useful.

We get it:  you’re a Minsky kindda guy

Personally, I’m not convinced the Monetary Policy Commitee  wants to move interest rates. I suspect the Bank would rather keep busy with administrative things instead at this stage of the cycle.

To me this has the whiff of the economist Hyman Minsky and his 'all financial institutions are inherently unstable' and need regulatory straightjackets-type ideas about it.

Slogans like 'acting as one Bank' when describing the coordination of the Monetary Policy Committee, Financial Policy Committee and the Prudential Regulation Authority sort of give it away and should have your average member of the Civil Service Club in Great Scotland Yard coughing up his Prince de Guyene Bordeaux of an evening at the very thought of such displays of collectivism.

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1 comment so far. Why not have your say?

Gary Reynolds

Jul 04, 2014 at 11:28

Lovely letter Stewart. Cheered me up after hearing the BoE is scrubbing its annual cricket match. Not sure what will replace it, something we English are still good at perhaps? Anyway, outrageous from you as always, and spot on with your advice on what should drive interest rates.

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