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Was asked to sum up Carney's term and legacy recently. I've blogged about this a lot in times past. But to recap...
1. He got rid of the taboo at the BoE about admitting that one thought privately and could talk about publicly about future interest rate decisions. Mervyn used to lie genially about 'facing one ball at a time'. Forward guidance was more honest and open.
2. That said, the execution of it was accident prone. a) picking a guess of the natural rate of unemployment that was to be confounded by the data. This was the point that would prompt a review of a decision not to raise rates in the future.
3. This looks like a mistake with the benefit of hindsight, but at the time no-one was to know that the apparent natural rate would fall so much and protractedly.
4. Poor execution also came with Carney's out of session freelancing in speeches about future rates. It got him the 'unreliable boyfriend' nickname. [ie has a commitment problem].
5. Inexplicably, Carney stopped short of publishing BoE inflation forecasts conditional on MPC's best guess of what it would do with rates.
6. A second largely positive legacy was Carney's preparedness to get the central bank balance sheet dirty with credit easing policies. Mervyn King was much more conservative in that regard and Carney embracing the modern view was a step forward that will hopefully endure.
7. A third, much less positive legacy, is how Carney has politicized his own role with regular comments revealing his views on the full range of government policy. Inequality, equal opportunities, climate change. This IMO has been very damaging.
8. If I can use that much hated clause 'I am also a liberal but', I'd emphasise that I share all of Carney's revealed politics. But by him revealing them he makes it more likely his replacement will be chosen for them, rather than econ and finance and leadership.
9. This grave error placed the BoE in peril as it sought to call the effects of Brexit on mon and fin policy as it saw it [which it did pretty well IMO]. Carney's liberal politicking [and also Haldane's] allowed the BoE to be painted as liberal Remoaners in on a conspiracy.
10. A document that summed up the best and the worst of the BoE's approach to Brexit was the Oct 2015 House of Lords report. Great lit survey of the costs and benefits of membership, plus much unnecessary and damning waxing lyrical no doubt written in by Carney's office.
11. In sum, he broke 3 taboos. On talking about future rates. On credit easing. And on politicking. Two needed breaking and bravo to him for that. The 3rd did not and I worry for the BoE's future as a result.
12. Carney made a big splash with his management reforms, following a Mckinsey Report into the BoE. But I don't think this deserves a mention, except to explain why it doesn't deserve a mention.
13. In the Q+A at the Mais lecture when he announced them, he hubristically claimed that if the BoE had had this new management structure - which made the BoE organagram look a bit more 'Canadian - maybe the outcomes for the economy and banks would have been more Canadian.
14. What made Canada Canadian was 1) conservative and somewhat backward banks and 2) being an economy enjoying a massive raw materials windfall caused by China bidding up the price of what Canadians had to sell. Not the BoC's organagram.
15. Chair shufflers like to think that their shuffling is going to be pivotal and important. New Labour thought that carving out the FSA from the bank was a stroke of genius; The Coalition thought that renaming it the PRA and putting it back in the bank was, likewise.
16. I suppose chairs need shuffling, if only to emphasize that they don't belong to the bums nestling comfortably on them. But I doubt Carney or anyone else's previous attempts achieved much more than this.
[Many a joke has been had at his expense by staff reflecting on the old Dilbert cartoon of the organogram cycle.]
*'backward' in reference to Canadian banks, of course, in today's language, means 'forward'.
