Ben Bernanke, ex-chairman of the US Federal Reserve, has been selected to oversee a review of the Bank of England’s economic forecasting.
Dr Bernanke, supported by the bank’s Independent Evaluation Office (IEO), will aim to develop the Monetary Policy Committee’s (MPC’s) approach to forecasting and monetary policy making in times of uncertainty.
Following this major announcement, industry experts have shared their opinions.
Matthew Jackson, director at Mint FS:
“I am sure many people will see this as a sign of weakness from the Bank of England.
“However, from an organisational point of view this can only be a smart move.
“Ben Bernanke has huge experience in the global financial markets and has what the Bank of England needs in spades at the moment, namely experience.
“To see a weakness and then actively go out to hire to fill this gap with someone hugely talented is a positive.”
Riz Malik, founder and director at R3 Mortgages:
“This is frankly humiliating. It appears to be an admission by the Bank of England that they may have made mistakes and that they require assistance from the Americans who have done a better job of combating inflation.
“Given their skills as past Governors and extensive knowledge of the bank’s operations, Mark Carney and Mervyn King would have been equally capable of undertaking such a review.
“It’s also possible that the Bank’s forceful response to initial concerns that it was too late to act could worsen our economic situation.
“However, given the Prime Minister and Chancellor’s strong support for the Bank of England’s policies, I am concerned that any advice will be downplayed or issued too late to be meaningful.”
Graham Cox, founder at SelfEmployedMortgageHub.com:
“I was surprised to see this outside appointment to review the Bank of England’s forecasting ability.
“It’s a brave move, tacitly acknowledging the Bank’s own failings in predicting the strength and duration of this inflationary spike.
“The Monetary Policy Committee has been asleep at the wheel in dealing with inflation, first insisting it was transitory, then that it would peak at around 6%.
“They’ve also been far too timid and slow in their initial base rate rises.
“Nevertheless, it’s encouraging they’ve recognized they have a problem in their forecasting models and are taking steps to address it.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group:
“Ben Bernanke was one of the key figures during the Global Financial Crisis and rumour has it that the Government forced the Bank of England’s hand to get him onboard.
“Bernanke was critical in setting up the emergency programme that backstopped various markets on the brink of collapse, from short-term business debt to securitised loans.
“15 years ago, Bernanke played the all-important role in enabling bailouts for bank and insurance company portfolios when it was most needed.
“Today, the Bank of England has clearly failed in its duty to protect the British consumer by keeping inflation at or below 2%.
“The interest rate tightening started too late, and it has now continued for far too long.
“Bernanke’s appointment is an indication of gross failure and dereliction of duty by the Bank of England.
“It is surprising that Andrew Bailey still has a job, and this Prime Minister could pay a heavy price for it at the polls.”
Chris Schutrups, founder at The Mortgage Hut:
“I actually read this and thought “smart move”.
“Ben Bernanke is very competent and incredibly experienced in financial markets, monetary policy and governance.
“It makes me think back to the good old days when we had Mark Carney and his revolutionary forward guidance.”
Paul Welch, founder and CEO at Large Mortgage Loans:
“As a regular contributor to the decision maker panel, it’s very clear that systems and processes need to change.
“I am pleased to see the Bank of England taking action to improve matters. As an employer, it’s critical to have clear guidance to allow for proper planning.”
