Mark Carney used his Mansion House speech to talk up the yield curve and the Sterling exchange rate, warning us that interest rates might rise sooner than markets think. On the face of it, this seems like a pretty regular central bank thing to do, an old-fashioned wiggle of the Governor’s eyebrows. However, I didn’t like it. It’s a return to old-style smoke-and-mirrors monetary policy communication.
First off, was he speaking for himself or the majority on the MPC? Were these comments a pre-release of the next MPC minutes? If so, why? Why couldn’t he wait for the next MPC minutes to come out, when MPC deliberations are set out more clearly? By acting out of the normal protocol, was he signalling that markets were misinterpreting events by more than normal? If he wasn’t, didn’t he realise that this would be one way to read him? What did the words…
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