Mr. Carney has very much limited his dialogue with the market crowd. For this effort he should be commended.
Recall that after the last meeting he said nothing. Then last Friday (Yorkshire Post) he said he would likely leave things as is and pretty much left it at that.
We had noted that Carney was a quick study but we didn’t realize just how quick.
Early on we sensed “surprising” UK economic vigor and in which sectors and, we predicted much higher interest rates. That worked.
But then in the last post we predicted that Carney’s reaction to higher long rates could well be an extension of QE, and that this would – contrary to conventional wisdom – drive long rates even higher due to elevated inflation reads. Finally, we noted that this situation could then arrest UK growth.
Carney is concerned with longer rates as a drag but – key - he also understands that chatter will inflame, not settle the market crowd. The less said the better (a lesson lost on Bernanke).
Carney has demonstrated the ownership of an asset rarely found in central banking - an understanding of crowd behavior.
Robert Craven
Recall that after the last meeting he said nothing. Then last Friday (Yorkshire Post) he said he would likely leave things as is and pretty much left it at that.
We had noted that Carney was a quick study but we didn’t realize just how quick.
Early on we sensed “surprising” UK economic vigor and in which sectors and, we predicted much higher interest rates. That worked.
But then in the last post we predicted that Carney’s reaction to higher long rates could well be an extension of QE, and that this would – contrary to conventional wisdom – drive long rates even higher due to elevated inflation reads. Finally, we noted that this situation could then arrest UK growth.
Carney is concerned with longer rates as a drag but – key - he also understands that chatter will inflame, not settle the market crowd. The less said the better (a lesson lost on Bernanke).
Carney has demonstrated the ownership of an asset rarely found in central banking - an understanding of crowd behavior.
Robert Craven
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