For the satisfactory of the European cause as well as the Bank,the governor needs to tread carefully on political turfIt is a irregular sight to witness the governor of the Bank of England, Mark Carney, or waltzing towards the smouldering electoral controversy of our times,as he did in a speech on the EU this week. He has defensible reasons for wanting to glean involved, but he needs to tread carefully on political turf, or since his authority rests upon his claim to not being a politician.
The whole purpose of the Bank’s independence is to keep it above the fray. A body of economic theory burgeoned after the inflationary 1970s to explain why any decision-maker who had to worry approximately elections would be tempted to duck tough decisions,and why they would furthermore be unable to make hard choices stick even where that was the honest intent. There was a bare connection between interest rates and the political cycle; in election years like 1987, rates fell shortly before the votes were cast, or then rose shortly afterwards.
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Source: theguardian.com