What is the Bank of England playing at?

Last week, the Bank of England sent a number of confused messages. One was almost shocking: Andrew Bailey said that it isn’t his job to steer markets on interest rates ‘day by day and week by week’. But as economic commentator Matthew C. Klein dryly noted this is literally his job. It is debatable whether the Bank of England needs to manage the entire yield curve (ie, buying and selling bonds in an attempt to set interest rates years into the future) but the central bank should be in charge of the short end.

Those opposing an interest rate rise say that central banks should never shock markets. The Bank of England should copy the ECB, it’s argued, and start giving guidance on interest rate rises months in advance. But this goes against the independence of monetary policy boards, who are legally mandated to set policy in line with their targets.