The leading central banks appear to have lost control of consumers’ inflation expectations, and the costs could be high. If wage increases accelerate over the next quarter, monetary policymakers will be obliged to respond firmly by raising interest rates sharply, or else lose even more credibility.
EDINBURGH – Central bankers are not required to be great wordsmiths. The ability to craft elegant paragraphs is not normally in their job description. Until recently, many leading monetary policymakers operated on the “least said, soonest mended” principle. Montagu Norman, the governor of the Bank of England from 1920 to 1944, lived by the motto “never explain, never apologize.” Similarly, former US Federal Reserve Chair Alan Greenspan once proudly observed that he had “learned to mumble with great incoherence.”
EDINBURGH – Central bankers are not required to be great wordsmiths. The ability to craft elegant paragraphs is not normally in their job description. Until recently, many leading monetary policymakers operated on the “least said, soonest mended” principle. Montagu Norman, the governor of the Bank of England from 1920 to 1944, lived by the motto “never explain, never apologize.” Similarly, former US Federal Reserve Chair Alan Greenspan once proudly observed that he had “learned to mumble with great incoherence.”