Bank of england

Listening to Mervyn King and his Bank of England deputy Paul Tucker over the past few days, you’d have thought they only found out about Libor manipulation with the rest of us, three weeks ago. Appearing before the Treasury Select Committee this morning, King stated that ‘the first I knew of any alleged wrongdoing was when the report came out two weeks ago’. But documents from the New York Federal Reserve, made public as part of the US Congress’s investigation, suggest that US authorities did know, and tried to warn the Bank of England that manipulation was going on. First, the transcript of a phone call on 11 April 2008 between a Barclays

&”Did you encourage them to make up the made up thing to their own advantage?” That’s how one Twitter correspondent paraphrased a question to the Deputy Governor of the Bank.  The LIBOR scandal has exposed the institutions and culture of the City to popular scrutiny as never before.  The population is reacting with justified incredulity to the absurdity it is finding.   LIBOR submissions from Barclays and everyone else were based not on the rate at which they would lend, not on what they actually had to pay to borrow, but on what they said they thought they might have to pay. On the face of it, that is the flakiest

Paul Tucker rather drove a steamroller over his hopes to be the next Bank of England Governor during his testimony to the Treasury Select Committee yesterday. We said on Coffee House last night that the suggestion that Tucker and co discussed a possible manipulation of Libor as far back as 2007 had seriously wounded his bid – although Tucker argued that he ‘thought it was a malfunctioning market, not a dishonest one’. Paddy Power agreed that Tucker was in trouble – and has duly lengthened the odds against Tucker getting the job. Before his appearance, he was 6/4, but those odds are now 5/2.  The new favourite for the job, according

Last Thursday Mervyn King said ‘the case for further monetary easing is growing’, and today’s surprise inflation figures give the Governor and his policymakers more leeway to introduce the next round of QE, probably as early as next month. Consumer price inflation fell to 2.8 per cent in May from 3.0 per cent in April, below analysts’ average forecast of a flat reading. It’s the weakest monthly inflation since November 2009, with the main contributors being falling food and oil prices. This is good news indeed, especially given that inflation has been – and still is – eroding savers’ earnings by about 8 per cent over five years. Let’s not

When the IMF published a report into the UK economy last year, I wrote a blog post detailing how it managed to please everyone: George Osborne, Vince Cable, Mervyn King, Ed Balls, everyone. This morning, I’ve been tempted to just publish that post again — because the IMF’s latest report is basically the same. Osborne will be pleased with its emphasis on deficit reduction, including the line that ‘Strong fiscal consolidation is underway and reducing the high structural deficit over the medium term remains essential.’ And he’ll also want to draw attention to its suggestion that the UK’s weak growth is largely down to ‘transitory commodity price shocks and heightened

Mervyn King unfurled a mast of metaphors this morning. ‘We are navigating through turbulent waters, with the risk of a storm heading our way from the continent,’ he said. ‘We don’t know when the storm clouds will move away.’ The eurozone, he said, is ‘tearing itself apart’.   So poetic was his language — a rare gift in a central banker — that it almost made one forget the painfully prosaic nature of his facts and figures. Inflation, already at target-busting levels, will be much stronger than the Bank initially envisaged, remaining above 2.5 per cent for the rest of the year. That’s almost a whole percentage point higher than

New roads in Britain are badly-needed, but who should bear the costs? Motorists, says David Cameron — and his speech today is a move in the right direction. No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now. But if they want a shortcut, they’ll have to pay for it. What I’m uneasy about is Cameron trying to raid our pension funds to help subsidise this. There are many ways to raid pension funds — QE is one. The National Association of Pension Funds estimates that a scandalous £130 billion has been wiped from the value of our collective pensions

The best of all possible worlds for the pension industry is a buoyant economy. Workers have enough money to save, share prices rise and dividend growth is robust. Interest rates are positive in real terms so annuities are good value. The economy ground to a halt in 2008. The overwhelming priority for everyone is to get growth going again. Without growth the services that pensioners depend on — such as the NHS — will struggle. Traditionally, governments cut interest rates and raise spending to get the economy moving. The Bank of England has cut interest rates as much as possible and the government deficit remains very high. We have exhausted

Can you trust someone like Alex Salmond to save Scotland from future crashes? The First Minister appeared on BBC1’s Sunday Politics earlier, where he was challenged about how he sees it. And it seems he may just be a graduate of the Gordon Brown school of Scottish financial mismanagement. In a Times debate on Friday,  SNP deputy leader Nicola Sturgeon said they’d use sterling — whether the Bank of England liked it or not — and would not need the Bank to be a lender of last resort because Scotland would be so sensible it wouldn’t need it. An interesting suggestion, given that the 1707 Union between Scotland and England