‘An intellectual mistake’: Mervyn King on what central banks should do

The former governor of the Bank of England shares his views on inflation, independent economic thought, and the case for a genuine salary cap in soccer. ‘A big reform is easier to implement than a sequence of small steps’. Mervyn King sat down with Citywire Selector to talk about the current state of economics, as well as his thoughts on the Bank of England’s failure to spot a crucial misstep in its attempt to curtail post-pandemic inflation. Having earmarked this as an ‘intellectual mistake’, King outlines two ways in which the BoE – and any central bank – can change course, which he said entails accepting now is not the time to tighten. Also in this interview, he was asked whether markets have become increasingly short-term and how he, as a former governor, would respond to such scrutiny. Here he offers an example of how former ECB president Jean-Claude Trichet used to know when to add the word ‘extra’ to a statement to prompt a very different kind of response from markets and media commentators.