But at the end of the day, they are rather powerless when it comes to significantly turning the tide of the battle.
You don’t really have to look very far for an example of that. The BOE is what every other central bank wishes they do not become and they are once again in the spotlight today.
Policymakers are hammering home the point that they are “doing their job” when it comes to battling against inflation. However, the irony is that they barely have any influence in the debate especially when the lack of fiscal inaction leads to stuff like this. That is not something that the BOE can control. And neither are supply chain bottlenecks, surging energy prices, geopolitical issues involving sanctions.
It is but the illusion that they are trying to sell but sadly, they might very well have to admit that all of this was for naught if the economy starts to crack under the pressure of everything else.
It is easy to point fingers and scrutinise the BOE for such “mismanagement” but the fact is that central banks have a mandate to follow and the less talked about point is how politicised every institution has become these days. No policymaker wants to burn bridges and none of them are willing to say what needs to be said.
That being the central bank toolkit is not the right one to be dealing with the current inflation problem. Governments are more well-equipped and should be leading the initiative. Yet, not one policymaker has come out to point that out in a meaningful way.
I think we all can get that if central banks don’t act, the problem might be worse. But please, spare us the illusion. It’s sad that integrity and central banking are two things that may forever now be mutually exclusive.