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Central Banks

Donald Kohn Says BOE and Fed Suffering Keynesian ‘Group-Think’

  • Fed’s former vice chair says more diversity of views is needed
  • New Keynesian economics is dominant model for central bankers
The Bank of England (BOE) in the City of London.

The Bank of England (BOE) in the City of London.

Photographer: Hollie Adams/Bloomberg

Central banks need to break the stranglehold of Keynesian economics to end the group-think that may have been partially responsible for the delayed reaction to soaring inflation, said Donald Kohn, a former Federal Reserve and Bank of England policy maker.

Kohn said the BOE and Fed could benefit from greater intellectual diversity among policy makers. It’s crucial for those officials to come from “a variety of backgrounds, not just standard academic Keynesians,” he said Tuesday at a hearing of the House of Lords Economic Affairs committee in London.