Elvis and Dickens Are Haldane's Models in BOE Communication PleaBy
Says improved public engagement can help stabilize the economy
Central bank set to start strategic overhaul of its methods
Don’t expect the Bank of England to stop talking about, well, talking, anytime soon.
After years of expanding responsibilities, crisis fighting and unprecedented policy measures amid seismic socioeconomic shifts, now is the time for central banks to step up their communication to match, according to BOE Chief Economist Andy Haldane.
Speaking at the Federal Reserve Bank of San Francisco, Haldane said central banks may not need quite the storytelling skills of Charles Dickens and the showmanship of Elvis. Instead they require bravery to reach all of society with their message. Using simpler language, more anecdotes, and engaging with regions would also help.
“Improved central bank communications can help stabilize the economy” by helping inform people on the likely course of policy, Haldane said. “This reduces the degree of uncertainty felt by households and firms, better enabling them to make decisions about spending, saving, working and the like.”
Better engagement can also improve the effectiveness of monetary policy with its effect on inflation expectations, he said, as well as help the central bank stay accountable. That may be all the more important to the BOE as it seeks to tackle surging inflation and waning productivity as the U.K. begins its withdrawal from the European Union.
After a year of controversies ranging from its pre-Brexit referendum communications and post-vote policy decisions to the recent resignation of Deputy Governor Charlotte Hogg, the BOE is doubling-down on its efforts to connect with the British public. Since Governor Mark Carney joined in 2013, the bank has increased the level of information published with its decisions, boosted its social media presence and held a series of events to bolster public engagement.
The BOE is now facing another strategic overhaul, with Carney looking to roll out a new three-year plan focused on workflow, communication and collaboration within months.
“The past few years have seen further societal and technological shifts, at a time when central banks having been bearing a heavier policy load than ever,” Haldane said. “As trust and technology has changed, so too must central banks.”
The BOE isn’t alone among its peers in feeling the heat from politicians and public alike. Transparency International EU this week said the European Central Bank is no longer accountable enough in view of its enhanced powers and the reach of its decision-making.
Despite his long-standing campaign to improve the accessibility of BOE communications, Haldane -- who was himself caught up in controversy over his comments on economic forecasting early this year -- accepts he still has long way to go.
“It is an irony, and not one lost on me, that this speech is a classic example of one-way central bank communications,” he said. “It comes in at around 11,500 words, contains 2,000 adverbs and adjectives and has a reading grade score of around 11. Perhaps central bankers, like this one, have always been better at preaching than practicing.”
— With assistance by Jill Ward, and Scott Hamilton