Not a study group
IT WOULD be no service to the nation or the Bank to re-engineer it as a machine with a single purpose: to whirr once a month and set interest rates. Burning up stacks of data and stoked by relays of economists, this machine now gives off learned pamphlets as a by-product. I enjoyed 'The non-linear Phillips curve and inflation forecast targeting' and 'Shoe- leather costs reconsidered', but not much. It was not on such foundations that the Bank's authority was built. As its formidable Governor, Kim Cobbold, said, the Bank is a bank and not a study group. In his day the Bank lived and worked in the markets and by them. It had every chance to know them and their inhabitants better than they knew themselves. Its instinct for markets helped to bring the international markets in money and capital to London, and, with them, £25 billion a year of over- seas earnings. They could easily be regulat- ed out again, and every so often ministers come close to that. Mr Maude and his com- missioners should be pleased to see the Bank enjoy its independence, as far as that goes and as long as it lasts. They should be aware, all the same, that the Old Lady of Threadneedle Street is still in danger.
Previous page
