Alex

For example. I sometimes talk about how the BoE broke its financial stability mandate when it failed to adjust its QT policy around Liz Truss’ new government agenda. And also when it failed to preemptively act on LDI when it first found out about the problem the summer of 2022. In theory, the very presence of the financial stability mandate obligated the supposedly independent central bank to step in to neutralise any financial fallout from poor government fiscal decision making. But this is problematic for obvious reasons. Rather than acting independently and allowing markets to discipline a profligate government, the presence of the mandate put the BoE in a position where it was obligated to support the government. The BoE famously defied this compulsion, but in so doing also explicitly failed to deliver on its mandate. Some say this was prudent in its own right. But herein lies the problem. Being able to determine what is or is not prudent transfers an insane amount of power to the central bank. While also making a mockery of the financial stability mandate. Furthermore, the BoE’s regulatory response to the LDI crisis went on to engineer conditions that made it much harder for a similar blow out to occur for future prime ministers. This action is in itself politicising, especially in the context of the political cycle that has followed. The BoE has in effect gone from consciously throwing one prime minister under the bus, to now effectively overprotecting the actions of the current one.

Starmer having a bit of a joke about Badenoch's blistering assessment of his predicament. Thanks her for "the usual warm and generous nature of her contribution" "In difficult days her in put is always a ray of sunshine" little moment of levity that makes MPs laugh