Newspaper article The Evening Standard (London, England)

Forget Transcripts, I'd Rather the Bank Got Its Forecasts Right

Newspaper article The Evening Standard (London, England)

Forget Transcripts, I'd Rather the Bank Got Its Forecasts Right

Article excerpt

Byline: economic analysis Russell Lynch

ON his last outing as Bank of England Deputy Governor at the London School of Economics, Charlie Bean faced questions from the audience on Threadneedle Street's destruction of the recordings of its monthly Monetary Policy Committee meetings.

Note that he wasn't challenged on the Bank's abysmal forecasting performance particularly on unemployment which has plunged far more dramatically than it expected in August last year. Instead this issue of preserving recordings, first raised by Treasury Select Committee chairman Andrew Tyrie a couple of a months ago, continues to gain unmerited prominence. The US Federal Reserve releases recordings after five years, the European Central Bank after 30 years. Politicians and commentators have worked themselves up into a righteous frenzy over the destruction of the historical records of the meeting for posterity.

Bending to the wind, the Bank has asked an independent expert to review its procedure.

Bean isn't a huge enthusiast for transcripts. He says: "People interrupt each other and if you listen to a recording it will be quite hard to follow. You wouldn't know who's speaking, who's interjecting the conversation bounces around from one topic to another."

Rate-setters may also refer to briefings from other meetings in the decision process, further confusing the listener. Spontaneity would be a victim too. Since the Fed started recording its meetings the average length of intervention from committee members has trebled to around 250 words as they rely on pre-prepared statements instead of a discussion.

The calls for recordings to be preserved stem from recent Bank minutes failing to reflect Mark Carney and Martin Weale's estimate of slack in the jobs market falling outside the MPC's central view of around 1%-1.5% of GDP. Carney is above the range and Weale slightly below it. But this slack is unobservable, so it's a highly uncertain concept.

Bean himself recently warned about the dangers of "spurious precision". …

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