I saw on Twitter today that Douglas Carswell responded to the March MPC minutes, which revealed that the Committee thought that uncertainty about the outcome of the referendum on EU membership had caused Sterling to fall, and may be depressing demand. He Tweeted: ‘Chancellor’s appointees agree with Chancellor: shock.’
I have absolutely no beef whatsoever with the minutes opining like this. But I do wonder whether the BoE’s previous interventions [the published report on EU membership, and Carney’s exchanges at TSC] have contributed to comments like this.
It’s pretty depressing to read that a prominent politician concludes that there is a conspiracy to subvert Bank of England independence, based on almost no evidence, and on a point that ought to be entirely uncontroversial.
Whatever one thinks about the long-term consequences of exiting the EU or not, the short-term effects of the uncertainty about our EU membership are not at all difficult to fathom, and the MPC reached exactly the right conclusion [as I wrote here for the Independent].
Carswell’s response to me was to urge that the views of economists be discounted, on the grounds, I think, that we are prisoners of our vested interests and predetermined ‘function’ in the political/bureaucratic process in which we operate.
Well, maybe. But down that road leads to utter nihilism, including the observation that politicians themselves issuing that advice should be ignored. Economists come in many varieties, academic or not, public or private sector, independent or corporately affiliated. I’m sure the overwhelming majority would agree on what uncertainty about our future EU status would do to Sterling, and demand, and the MPC view reflects this.