During 2020 and 2021, as inflationary dangers grew, there was “no mention of the monetary data in the Bank’s reports”, King told the Lords. “The excessive reliance on models that ignored money altogether was somewhat foolish,” he added.
No one is saying the MPC has an easy job. But it is vital this all-important policymaking group starts to display some genuine cognitive diversity – the most important diversity of all.
The Bank’s failure to heed clear market-related inflationary warning signs, and its institutional aversion to recognising the importance of monetary aggregates, has negatively impacted the lives and livelihoods of millions.
Had the Bank been alive to these dangers, UK rates would have started rising earlier and more decisively – allowing inflation to be tamed with fewer rate rises overall.
The Bank’s main interest rate was increased no fewer than 14 times from December 2021 to August 2023, from 0.1pc to 5.25pc, hammering countless businesses and mortgage-holders. It could have been so different.
By bringing in King as president, someone from outside the cricket establishment, the MMC is to be congratulated for ensuring that differing, but still very valid perspectives will be heard within the game’s policymaking inner sanctum.
It’s a lesson that the Treasury and the Bank of England most urgently need to learn.
