U.K. Minister Revives Criticism of BOE's Loose Monetary Policy
(Bloomberg) -- U.K. Environment Secretary Michael Gove revived his criticism of the Bank of England and its peers over the fallout from monetary-policy loosening, saying they have unduly benefited the wealthy.
Gove’s comments at a speech on Wednesday echo remarks he made in 2016, when the pro-Brexit Conservative lawmaker laid the blame for multiple economic disasters at the door of “technocrats” like BOE Governor Mark Carney.
That came at a particularly sensitive period, with the central bank under fire over its analysis of the decision to leave the European Union. Around the same time, Prime Minister Theresa May said some monetary-policy measures had bad side effects. Carney responded that he wouldn’t take “instruction” from politicians.
Carney also said at the time that inequality is due to “much more fundamental” issues and broad attacks on monetary policy are a “massive deflection exercise.”
Gove’s latest attack comes amid a brewing conflict in the government, with May facing a major cabinet rebellion over Brexit that could destabilize her administration.
His speech didn’t explicitly mention the BOE, though it did state that a gloomier outlook for workers has coincided with a period of global policy loosening, which includes actions by the British central bank.
“Since 2008, the outlook has grown darker for most,” Gove said, citing weak productivity and wage growth and increases in unemployment.
“These unfortunate trends have gone hand in hand with an increased concentration of wealth, and power, in the hands of the already wealthy and powerful,” he said. “Loose money policies, from the European Central Bank to the U.S. Federal Reserve, have increased the prices of assets, from real estate to equities, strengthening the economic position of the already wealthy.”
Invoking the controversy of 2016, he added that “that is why I firmly believe the prime minister was so right to call out what she described as the ‘bad side effects’ of these practices.”
Just two months ago, BOE chief economist Andy Haldane said there’s no reason to suggest looser policy had a significant effect on inequality and central-bank actions helped “almost all cohorts” of the economy.
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