One of Britain’s most senior economists gave a bizarre speech where he compared himself to a character from “The Shawshank Redemption.”
In a speech on June 30 in Port Talbot, Wales, the Bank of England’s chief economist Andy Haldane used a rather elaborate metaphor focused on the classic film about Andy Dufresne, who “crawled through a river of s— and came out clean on the other side,” after being falsely imprisoned for the murder of his wife and her lover, to talk about the need for quick monetary policy action in the aftermath of Brexit.
“I would rather run the risk of taking a sledgehammer to crack a nut than taking a miniature rock hammer to tunnel my way out of prison — like another Andy, the one in ‘The Shawshank Redemption’. And yes I know Andy did eventually escape. But it did take him 20 years. The MPC [Monetary Policy Committee] does not have that same ‘luxury’,” Haldane told an audience.
While it may have been a slightly odd segue, Haldane’s comment has a crucial message: namely that he believes that the Bank of England needs to act swiftly and strongly to use its policy tools to combat the economic fallout of the UK’s vote to leave the European Union in June. That fallout, so far at least, includes the delaying of spending and hiring decisions by companies, Haldane noted.
Here is a less obfuscated section of Haldane’s speech (emphasis ours):
In my personal view, this means a material easing of monetary policy is likely to be needed, as one part of a collective policy response aimed at helping protect the economy and jobs from a downturn. Given the scale of insurance required, a package of mutually-complementary monetary policy easing measures is likely to be necessary. And this monetary response, if it is to buttress expectations and confidence, needs I think to be delivered promptly as well as muscularly. By promptly I mean next month, when the precise size and extent of the necessary stimulatory measures can be determined as part of the August Inflation Report round.
While his comments were made over two weeks ago, and Haldane’s view appears to echo the official line of the Old Lady of Threadneedle Street. On Thursday, the Bank’s Monetary Policy Committee — of which Haldane is one of the most dovish members — voted to leave interest rates unchanged at 0.5% by an 8-1 vote. Despite that vote, the BoE telegraphed big stimulus, either in the form of quantitative easing, or a rate cut, at its August meeting in just three weeks.
This isn’t the first time Haldane has used a slightly odd metaphor to discuss a serious point during a speech. In May, he described people as being “sentient, water-filled whoopee cushions moulded over millions of years of evolutionary experience,” and extensively made reference to The Sneetches, a Dr. Suess book about “an imaginary creature of which there are two types: those with and those without stars on their bellies,” when talking about the importance of diversity in the workplace.
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