BoE polishes social media reputation – but not its gold

Reuters Contributor
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By David Milliken

LONDON (Reuters) – The Bank of England made its first major foray into social media on Friday when its chief economist, Spencer Dale, spent an hour replying to questions on Twitter – including whether the central bank polishes its gold bars.

The answer was no – gold doesn’t tarnish – but Dale also addressed more serious issues, including saying an interest rate rise next year is very unlikely.

The BoE initiative was a rare one in the conservative world of central bank communications, where officials generally prefer to talk to the public through 14-page speeches rather than 140-character social media postings.

Faced with Twitter user @JediEconomist – who posed questions in the tortured syntax of the Star Wars character Yoda – Dale advised: “I think it’s very unlikely that we will raise Bank rate in 2014. We need to see sustained period of strong growth.”

The concision, if not the vagueness, will be a relief to critics such as lawmaker Andrew Tyrie, who as chairman of the parliamentary committee that monitors the BoE has accused it of failing to make its message easily comprehensible to the public.

The central bank also got a warmer response from social media users than utility company British Gas, which received a volley of criticism in a similar question and answer session on Thursday after it announced big price rises.

“Pretty awesome stuff” and “really cool” were among the comments by users after the event – though some reporters and investors complained of less-than-direct answers to more pointed questions about the effect of forward guidance on government bond prices and interest rate futures.

Dale has a reputation as one of the Bank of England’s more hawkish policymakers, and in a newspaper interview earlier this week conceded that an interest rate rise was possible as early as next year.

But he played this down on Friday, and said that Britain’s slow wage growth and still low number of housing transactions meant the BoE’s commitment to keeping rates low until unemployment falls to 7 percent remained solid for now.

In August, the central bank forecast that unemployment would not reach this level until late 2016 – a view most private-sector economists think is too gloomy.

On Thursday, Dale said a rate rise could well come in 2015 rather than 2016.

(Editing by John Stonestreet)