The Bank's worst decision

Mervyn King, the Bank of England governor never comments on the past decisions of the Monetary Policy Committee.

He's often invited to admit to a mistake, or a regret, or even allow a moment of self-congratulation. But he generally declines to comment, explaining that the Bank has to focus on the next decision, not the last one.

He's right to remain silent. If he comments on one decision, he'll be invited to comment on another, and he'll soon be forced to comment on everything, which would be fine except his extensive commentary would then inevitably be over-interpreted.

But just because he doesn't comment, doesn't mean we can't.

And there is one decision taken by the MPC that deserves to be named and if not shamed, at least named and regretted.

It was taken in August 2005, and it was one Mervyn King himself did not agree with. Indeed, it was noteworthy as the first decision in the history of the independent Bank of England in which the governor had been overruled, and it was in retrospect probably also the worst decision the Bank has taken.

more ...
------------------------
Check out the rest of this blog here.