Talking the economy back

[Suff]

So the BOE Agents report says there will be "No short term impact of the Brexit decision" and that longer term impact is "unsure".

Bit of a difference from the promised armageddon and lost decade of mistery.... At the same time the jobless levels have dropped again.

To me, having studied central bank statements for two decades, it sounds like a bank which is in the process of withdrawing from it's previous position and signalling a policy shift. In short they are talking themselves into a position where they don't have to take much in the way of action in August.

Which will boost the £ again.

Immediately post the vote the Bank was talking the ecnomy down with every word. Now the Bank is talking the economy up with every communication.

My take?

Someone has "had a word"...

[cromwell]

Well if they have they thank gawd for that. There are people in this country who it seems will only be happy if we plunge head first into the financial mire, just so they can say "I told you so"; and Mark Carney is one of them.

The constant stream of misery guts stories (with no real basis, as yet) has been getting right on my nerves.

[Workingman]

There are people in this country who it seems will only be happy if we plunge head first into the financial mire, just so they can say "I told you so"; and Mark Carney is one of them.

I certainly will not be in that group even though I did vote to remain. We voted leave and now we all must work damned hard for it to succeed.

However, I do think that all this "talking down the economy" spiel has been over-egged somewhat. I find it quite perverse. It is as if leavers are using it as a pre-emptive excuse to deflect any criticism of the part they played should the economy plunge further down the line: 'It wasn't Brexit, gov, honest, it was the remainers, blame them.

Get a grip! There are all sorts of influences driving the economy up, down, this way and that, and they happen all the time. Brexit schmexit, remain schemain.

[Suff]

I would agree with you WM if it were not for the fact that I am an avid central bank watcher and have been for the last 20 years. Because for the last 20 years I've been in a multi currency situation where my income and expenditures have been in at least two currencies and sometimes three.

So you will forgive me for repeating that, in the last 16 years especially, the central bank communication analysis has been predicated with the following:

"Leading the market in the right direction by hinting on future policy".
"Driving the market by implied central bank action which will stop the current trend"

The whole analysis of the statements of central bankers has been about the "messaging" which is designed to prepare the markets for action.

So what was the "messaging"?

Mayhem, disaster, radical central bank action, loss of profits, loss of confidence, loss of investment.

What was the action?

Immediate moves (not words), to counteract the "pre stated" impact.

What happened? The markets went mad. Well what would we expect, they had been told the world would end so they tried to end it first so they could get away with even a modicum of profit.

Exit one PM and one Chancellor. Enter a new PM and a new chancellor.

What has happened? Rates on hold, no easing, no solid calls for action, back to normal CB practise of studying the data and making small, reasoned, actions to head off a growing trend.

End result?

Almost instant stability in the £, growth in the stock market and slow but steady appreciation of the £. The market had "priced in" a cut in rates and a lower £. Of in other words the markets shorted the £ to make a fast buck out of our misery. The Bank, under new direction, wrong footed the markets and a lot of people lost money on their short calls. Effectively killing off speculation on the £ in its tracks.

Don't tell me they weren't running to a pre planned agenda to cause instability and panic to try and overwhelm the vote. They were and it's obvious. However a new PM with the message that, come hell or high water, we're following the vote of the people and all the games come to a screeching halt.

The next 3 months will be key and my bet is that the bank does very little or even virtually nothing. I could be wrong but the further we get from the vote the less likely it is that the bank will do anything at all. If everyone just calms down then the UK will be back on track in 6 - 9 months and with a growing list of trade suitors.

I wonder when people will begin to realise that the trade deals on offer will make the $16tn of the EU look like pocket change????

Then the games will begin in earnest and they'll start in Brussels when they suddenly realise that instead of being in the driving seat they will be the passenger in the boot with the rotting garbage....

[Workingman]

What I was trying to get across is that it is not only the BoE putting out the message. UK big business is doing it, the ECB is at it, so are the IMF, the Yanks, G7 and G20, and International markets.

The uncertainty is out there and that is largely why the UK economy is at the mercy of the markets. One bit of news and things go up, another bit and things go down. We might be able to control what Carney says, but we have no control over what others think, do, or say.

[Suff]

True, but as the BOJ has proved over the last 2.5 decades, go against the central bank and the central bank has the ability to really hurt you. We've moved from messages of panic to messages of pain if they try to hurt us. Messages that nothing has changed and won't change for at least 1.5 years. Messages a market which turns on a one month trend can live with.

Everyone thought they could keep their own cozy little world and we'd just go on paying the price for it. So the people of the UK decided not to pay the price. So the markets are going to have to adjust. But, in the end, as Australia has proved. The 5th largest economy in the world is way too big a prize for countries to ignore for long. A free trading UK, for a country like Australia, is worth three restricted trading EU's in the bush....

Time for those who have the responsibility for the UK economy to start reminding the world of that. The time for fearing the unknown is over. The time for bold confident steps into the future is now.

Yes Carney's job spec just changed a bit. Time to get on with it.