What Carney’s ‘forward guidance’ should say

The 'forward guidance' that Mark Carney should be putting forward would not be popular, says Matthew Lynn. But it is what people need to hear.

Mark Carney, the new governor of the Bank of England, has lost little time in making big changes in the way in which British economic policy is conducted. He has already said that the Bank will start setting out forward guidance' on its plans for interest rates, and may do so as early as next month.

The trick is one Carney is famous for in Canada. And while there is nothing wrong with it in principle, the trouble is that the guidance is likely to be of the wrong sort. Carney will almost certainly be telling us to expect near-zero interest rates for years to come.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.