Central bankers pick their words very carefully. Their powerful position pulling the levers of monetary policy gives every statement outsized importance. And in the UK, the newfangled “forward guidance“ policy unveiled by governor Mark Carney has analysts combing the Bank of England’s statements more closely than usual.
The bank has pledged to keep interest rates at their current historic lows until the unemployment rate falls below 7% (it is currently 7.7%). A steady stream of better-than-expected economic news has convinced many that rate hikes will come sooner rather than later. Markets are pricing in a hike in 2015, a year ahead of the guidance based on the central bank’s unemployment forecast.
Against this background, it was surprising for a senior Bank of England executive—chief economist Spencer Dale—to appear on Twitter today for an extensive public Q&A under the hashtag #AskBoE. Normally bank officials are seen delivering obtusely worded speeches or artfully dodging questions from journalists at press conferences.
This is what we learn when central bankers exposes themselves to the masses on social media, and have to explain themselves in 140 characters or less:
#AskBoE Survey released today shows 44% households bringing forward their expectations of 1st rate rise to within a year.
Failed has Fwd G?—
Yoda (@JediEconomist) October 17, 2013