The appointment of US Federal Reserve ex-chairman, Ben Bernanke, to oversee a review of the Bank of England’s economic forecasting is “frankly humiliating”, R3 Mortgages founder and director, Riz Malik, has said.
Malik suggested that this appears to be an admission by the BoE that they may have made mistakes and that they require assistance.
“Given their skills as past governors and extensive knowledge of the bank’s operations, Mark Carney and Mervyn King would have been equally capable of undertaking such a review,” Malik argued.
“It’s also possible that the bank’s forceful response to initial concerns that it was too late to act could worsen our economic situation.”
He added that, given the prime minister and chancellor’s strong support for the BoE’s policies, he was concerned that any advice will be “downplayed” or issued “too late” to be meaningful.
The Kushman Group property developer and portfolio landlord, Kundan Bhaduri, shared a similar sentiment, saying: “The BoE has clearly failed in its duty to protect the British consumer by keeping inflation at or below 2 per cent.
“The interest rate tightening started too late, and it has now continued for far too long. Bernanke’s appointment is an indication of gross failure and dereliction of duty by the BoE.”
Bernanke's experience
However, Bhaduri praised Bernanke’s experience, stating that he was “one of the key figures during the global financial crisis”, and that he was “critical” in setting up the emergency programme that backstopped various markets on the brink of collapse.
Bernanke was chair of the Federal Reserve during the global financial crisis and oversaw the Fed’s methods to combat this.
These methods including enacting a low-rate policy, reducing benchmark interest rates to near zero, and proposing quantitative easing.
Bernanke was also responsible for assisting in the bailing out of several large financial institutions, including Morgan Stanley, Goldman Sachs and AIG Insurance.
Optimistic opinions
Bernanke’s experience was a source of optimism for some, such as The Mortgage Hut founder, Chris Schutrups, who said: “I actually read this and thought ‘smart move’.
“Bernanke is very competent and incredibly experienced in financial markets, monetary policy and governance.”
Mint FS director, Matthew Jackson, stated: “I am sure many people will see this as a sign of weakness from the BoE. However, from an organisational point of view this can be a smart move.
“Bernanke has huge experience in the global financial markets and has what the BoE needs in spades at the moment, namely experience.
“To see a weakness and then actively go out to hire to fill this gap with someone hugely talented is a positive.”
A similar positivity was shared by Large Mortgage Loans founder and CEO, Paul Welch who said: “As a regular contributor to the decision maker panel, it’s very clear that systems and processes need to change.
“I am pleased to see the BoE taking action to improve matters. As an employer, it’s critical to have clear guidance to allow for proper planning.”
