The Bank Of England Needs to Up Its Communications Game
(Bloomberg Opinion) -- It is finally dawning on the 325-year-old Bank of England — colloquially referred to as the Old Lady — that it needs to wise up a bit with communication efforts in the digital era.
This follows another incident in a series of recent market-sensitive mishaps that’s once again making the Bank of England look unprofessional. Reuters reported Wednesday that, following the Sept. 23 Monetary Policy Committee meeting, Deputy Governor Ben Broadbent conducted a closed-door gathering with fixed-income institutional clients of Morgan Stanley. The off-the-record conclave had spurred market-affecting rumors that Broadbent had hinted interest rates might not be raised as soon as the MPC meeting on Nov. 4.
Right after the news broke, a Bank of England spokesperson confirmed that the kind meetings conducted by Broadbent will no longer be permitted. It's an embarrassing unforced error. In the new world of online surveys and televised press conferences, there are clear ways to send and receive potentially market-moving information that are open to all at exactly the same time. It’s a skillset the Bank seems to have lost since the pandemic. It should conduct a thorough review of how the lack of transparency of its operations can affect markets. Hopefully, such introspection will help drag it into the current century.
It is flabbergasting that these restricted get-togethers were still taking place. The BOE produces no formal minutes for these private proceedings. The opacity can lead to speculation as investors and institutions jostle to interpret what little information they have to gain market advantage.
Often it is what is not said that can move markets, for example, rightly or wrongly interpreting body language or the tone used in a private meeting. It would be surprising if some attendee didn't try to glean something from the way a central banker sat in his chair or how he responded to some question of, say, employment data. Don’t put any MPC member in the invidious position of being a potential source of unfounded rumors.
The BOE should have known better. Last November, there was a furor over European Central Bank Chief Economist Philip Lane's regular post-ECB press conference clarification calls with investors.
There simply should be no room for allegations of partiality when it comes to policy makers who vote on interest rates — or senior officials close to the process. The minutes of the Debt Management Office’s meetings with government bond market-makers are released publicly.
It may sound regimented. But consider the times. The Financial Conduct Authority requires full disclosure of all client entertainment interaction between dealers and brokers; and it is now even considering visiting traders at their homes to make sure they stay within the rules. Surely, the BOE should be held to even higher standards.
Standard practice really has to be full transparency in all investor or market participant meetings. Especially at this highly sensitive time when the Monetary Policy Committee is sending up bat signals about raising the bank rate sooner rather than later.
What is most frustrating about this incident is how it reflects on someone as highly regarded as Broadbent. According to the Financial Times, the Bank was thinking of banning these meetings anyway. Why did it not act on its better instincts earlier?
Which brings up another matter: the technical quality of the Bank’s communications. Governor Andrew Bailey press conferences following MPC rate-setting meetings have been plagued by video and audio outages. Enough already. Get your act together.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.
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