Good afternoon ladies and gentlemen. This is David Marsh from OMFIF. It's a great pleasure to be joined today by Andrew Bailey, the governor of the Bank of England, who's going to be talking about a rather fraught subject which is close to everybody's hearts, which is the question of central bank independence in an era of financial instability. And this has been quite a bit in the news, not just in the UK. Just to set the scene slightly before the governor makes a few comments and then we'll go into a Q&A session. We've got a new Treasury Select Committee report coming out sometime over the next, I imagine, the months ahead. It's just started in September. We've had several reports also from the House of Lords Economic Affairs Committee in 2023. We've had the Ben Bernanke report into what happened over this transitory inflation and whether the bank could have done better over that two or three years ago. In other countries, in the United States, as you don't need me to tell you, there has been a debate about how independent is the Fed from political influence that is still rumbling on. We've had various central bankers deposed, the most notable one being in Indonesia. So all these things are reverberating around the world. And we look at the European Central Bank as well, which has got on paper the best degree of independence it could possibly have, where it might get drawn into a political fray. I stress the word might over the issues of what's going on in France right now. So, it's a hot topic and we have got a new committee starting as we said. So, Andrew, you're getting ready to discuss all these issues. Perhaps you could just give us a few opening remarks from your point of view. We're not going to be talking about current monetary policy because we have entered rather early the quiet period ahead of your next meeting in early November. Looking forward very much to what you have to say, Andrew, and then we'll have a question and answer session with myself joined by members of the audience. Thanks very much for being with us today.
Well, thanks David and it's very good to be here today and as you say it's a very good subject. It's always a very good subject to discuss actually but there's a particular sort of timeliness to it. First of all, let me say quite straightforwardly. I very much welcome the TSC work that they're doing actually. I think it's an excellent thing. Such an important subject and it's actually a very important part of our accountability and I'll come back to accountability and a few things I'm going to say at the beginning. I think the sequence of things I'll say naturally leads to accountability. So I think there are a number of challenges in the current environment which put this sort of question of independence into quite sharp relief. The first one I'll start with is it is in the sort of more in the monetary policy world. But as you said we're in the quiet period. So nothing I say should be taken as in any sense giving you a clue as to how we're going to make a decision in just over two weeks time because we're not there yet. So these are more general points, the points in the way of longer run points. The thing I would say and this is a sharp relief point is that we've been experiencing and of course are experiencing at the moment what I would call a sequence of negative supply shocks effectively. So the Gulf conflict is the latest of those. You can obviously also point to Ukraine. We can debate COVID. I tend to think it was both a supply and a demand shock. But you know, supply shocks and negative supply shocks are hard to deal with because obviously they create this trade-off potentially often actually between inflation and activity. Now it's not as if central bank mandates can't handle it but they are more challenging. There's no question about that. I think that they do however really emphasize the need for central bank independence and the need for monetary policy frameworks and monetary policy targets because honestly these are harder times to deal with and it's at times like these that we need the frameworks but I recognize that it's also at times like these that there can be more questions raised about how independence works, how accountability works. But this question about dealing with negative supply shocks particularly and big ones. The second point I make on that is dealing with negative supply shocks that come in close sequence, in close succession. Sorry, I should say put it better. There is a standard sort of view that if you face a single supply shock, a single negative supply shock, you should essentially look through it on the basis that the monetary transmission mechanism will typically often be longer than the life of it, will be longer than the supply shock. And that is the origin really of the point about looking through. The problem of course is that we had a second one, a very big one in the context of the Ukraine conflict, and you can't make the same points about transitory when you have a sequence of shocks because they clearly go on for longer and that is much more challenging. It's also much more challenging in terms of what impact they leave in terms of public expectations because if the result is that inflation is higher for longer, it has been that result, we have to deal with it but of course it does leave an impact and we have to assess that very carefully. So a period of supply shocks of this sort I would say is challenging but it's also a period when we need institutional structures more than ever. So that's the first point. Second point really is about the balance sheet and about conditions. One of the questions that I think remains to be debated again and again is what are the tools that are available when you actually get to the lower bound. Let's not, I'm not going to enter into the debate about where the lower bound is. Let's for the sake of heroic assumption assume you are at the lower bound. So low bound interest rates in other words, and or normal interest rates anyway. I think there are possibly three tools that you can use. You can use quantitative easing, you can use negative interest rates, you can use fiscal policy. None of those are, I would put forward, outstandingly attractive tools. They're not tools that one reaches for with great alacrity. Let me put it that way. But the question is what do you do? And I think we have to come back to this, the whole debate around quantitative easing. I think we do have to come back to that question because that question lies at the heart of it. And it's a sensible question to come back to. Those tools are also more challenging I would say in the context of the independence of a central bank because they are not normal tools, they have impacts, and the transmission mechanism is more complicated as well.
The third point I come on to is the financial, what I call the financial stability point. Central bank independence is obviously often construed in terms of monetary policy. I mean, nearly all the literature on central bank independence in the academic world is in the context of monetary policy. And I gave a speech at Columbia University back in April on this subject and I used it deliberately to expose what I think is one of the things that gets talked about a lot in private but doesn't get said much in public, which is of course actually we have independence in respect of financial stability. Again, it's well defined in legislation or it's defined in legislation. It's got accountability attached to it. It's got institutional structure attached to it. But the two things are not the same. In all my experience, independence in respect of monetary policy is a very different animal to independence in respect of financial stability. And I used the speech at Columbia to sort of go through, in my own view, why that is and what are the consequences of it. So I'll give you a practical example. Over 30 years, or nearly, of the MPC's existence, and I've been involved in most of that period doing various roles in the Bank of England, I can think of only a very small number of occasions on which serving ministers have questioned MPC decisions, have sought to influence MPC decisions. And it has been, I think, a success. That is not by no means the case of financial stability. And I don't say that to criticize when I make it as an observation. Let me just make it as an observation. It is, you can read it in newspapers many, many days. Why is that? Well, I tried to set some of those out in the Columbia lecture. The policy reach of financial stability is much larger in many ways. It's not because monetary policy is narrow, it can have very big impacts, but it is quite contained as a policy. Financial stability touches on a lot of other areas of public policy. You think about areas like growth, even areas like environmental policy sometimes. There's a lot of touch points. Secondly, it's not the case that monetary policy does not engage interest groups in the economy, but it doesn't engage them in quite as pointed a way as financial stability does because financial stability directly impacts institutions like for instance banks. All the literature tells you that they will lobby as a consequence of that and indeed they do. Now it's not that we don't get lobbied on monetary policy but I would say that from long experience the nature of the activity is very different. So financial stability is different. I don't think there's any point sort of bewailing this point and saying isn't this terrible, we should do something about financial stability, but I do think it's important to sort of, in a sense, first of all be much more open about it and it shouldn't be a hidden secret as it were, because in many ways it's staring at us in plain sight. But I think it is something that should have more discussion and if I had one point to make about the TSC inquiry, it is all about monetary policy. Now I know why, I understand exactly why they're doing it. But there are some very important issues on the other side of the house if you like. So that brings me finally back to accountability. It's very important. Let's define independence quite carefully here. It's a very carefully constructed form of statutory provision. We are independent in effect of government. We're not independent of parliament in the sense that parliament can legislate, and we're not independent of the people of the country. Of course we're not. I mean, we should and nobody ever should ever think that we are, nor should we be. We serve the people of the country. We serve their representatives in parliament. We're accountable to them. I take that very seriously. Some people may say that I've immediately qualified independence by saying that. I don't believe that for a moment. I think this is how democracies work. It is a very well-structured form of independence. It must be otherwise we really lose our legitimacy. An important part of that is accountability. Accountability to parliament, accountability to the public, but accountability to the public through parliament. I have appeared in parliament more times than I care to remember. I regard it as amongst the most important things I do. We take it extremely seriously and I know my fellow governors in other countries do as well. It's very important and I therefore welcome the report and review that TSC has just announced because I think it's a very important part of our accountability and they will get a very serious input from us at the Bank of England because we welcome it. We take it seriously and regard it as an important part of the institutional structure. So David, I'll leave it there I think if that's okay.
Yes, thank you. We'll go through all those points one by one and we'll also take up the QE point that you've invited us to look at. Also, it's interesting that you are actually giving some advice to the TSC about possibly bringing in the financial stability. I hope that they're listening as well and maybe they'll add further to the burdens on you on this. But perhaps I could just go back to first principles because we've had this period where over the last 20, 25, 30 years we've had central banking independence as you say from governments, from policy makers on the political side. We've had that now enshrined in a number of countries around the world. This has of course coincided with a period when we did have pretty low inflation partly because of the entry of China into the World Trade Organization. It makes it easier to defend central banking independence, which we know in Britain has been a hot topic for a hundred years. It makes it easier to defend if you've got the evidence to back this up. However, what's gone wrong in the last couple of years is that central banks were slow, I believe, in putting up the interest rates after we had the aftermath of COVID and then the opening of the full-scale invasion. And it's more difficult to defend, isn't it, at a time when inflation has been above target, not just in the UK, but in other countries. In other words, do you feel not just with parliamentary inquiries, but in your day-to-day life that you need to go the extra mile to prove that this thing does work because the empirical evidence backed it up in the first 20 years? It didn't in the last three or four years.
Well, it's obviously a very good question, David. Let me say I don't want this to be easily understood as me being self-serving. The first period was a period of quite small shocks frankly, and as you said there was probably an impact from China joining the World Trade Organization, but there were also quite small shocks in the economy. That has not been the case really from the financial crisis onwards. So you can divide the MPC's life into two somewhat slightly unequal halves now because the second half is obviously getting longer as time goes by. So that's the first point to make. Second, let's look at, as I say, I'm not going to give any clues or any comment on what we're going to do in two weeks time, but let's look at where we are today. Let's go back to immediately before the conflict broke out in the Gulf and Middle East. I said a number of times I was very much expecting us to be back at the 2% target in the late spring. And the question then for us was what interest rate level would we set to hold it there? I have seen nothing subsequently, including today's number, to change my view on that. Unfortunately, we've had a conflict break out which has severely affected energy markets. Much of our inflation is in energy prices. Now what I have to say is no central bank, I mean I wish I could create world peace but no, I'm afraid we can't. We can't predict when these conflicts are going to start and we can't obviously solve them with monetary policy in the sense that monetary policy doesn't bring peace in the Middle East. Our job is to return inflation to target, and the test of the effectiveness of central bank independence and monetary policy framework is how we do that frankly. So I do think that in a sense central bank independence is more important in conditions like these than it is in some of the times we've had in the past when holding inflation at 2%. It's not because my predecessors had it easy. They were operating in very different circumstances. These are times when we need the institutional structure more than ever.
Would you say also that at a time like this when things are very difficult, you've got many different factors impinging upon you, things which you can't focus on entirely by monetary policy, that you're going to, as a creed, as a cadre if you like of central bankers, you do run the risk of being very unpopular. Are you willing to go through that valley of tears of unpopularity to do the right thing for the right reasons at a time when the rest of the political scene and the public might find that this is the wrong thing to do? Are you willing to take that hit?
Yes to that question because otherwise we're not doing our job. You're right, it's a very good question to pose. I think it's the right question and the answer has to be yes.
And another question which goes to the heart of the matter before we come into the more technical details which I want to do is this issue about fiscal monetary cooperation. Now in a perfect world you'd have the fiscal side doing their thing and you'd have the monetary side doing their thing. You are monetarily independent. You've been given that by parliament in 1997, 1998. Is there not a time particularly at a time of great crisis when you do need to have some coming together of the fiscal and the monetary side? I mean how do you do that? I don't know whether that's through regular meetings with the chancellor which might happen anyway or through some slightly more formal way of coordination between the Treasury and the Bank of England. Could that be done without undermining your independence in this very valuable area of setting interest rates? Should there be more monetary fiscal policy coordination not just in speeches but in day-to-day solid practical decision-making?
Well, let me give you a sense as to how it works, because I think the answer is a bit nuanced in that sense. So first of all, the chancellor and I obviously, by the way I'm on the seventh chancellor since I was appointed. Well, I could say whoever the chancellor happens to be. Actually, six since I started my term since I was appointed. But you know, the chancellor and I just discussed the economy regularly. And I think that's right. I think most central bank governors, when I talk to my fellow governors, I think that's the norm. I don't think there are many cases where independence is interpreted as meaning you don't discuss the economy. We discuss the economy regularly. And we exchange views on it. We exchange sort of what we've learned on the economy. And I think that's very important. What we don't do is say well if you do this I'll do that. Just to put it quite simply. But what we obviously have got is that both policies are operating within frameworks. Monetary policy obviously has its target structure and target framework and operational framework. Fiscal policy, many countries including the UK, not all but many countries, has a framework which it's operating in, and the UK is, I think, a good example of that. So I think that the question of do we need to sort of in a sense coordinate more in the sense of making the policies sort of interactive, I think that's really answered through the frameworks actually. I think if we're both operating in our frameworks, now when we have shocks like the ones we're going through at the moment, we both have to think hard about well how do we work the framework in this context. How do we put the framework to use? But I think there's a very important line between saying are we operating within our frameworks, we're not crossing the line and going into the sort of well if you do this I'll do that type. We're not deal making in that sense. I'll never do that.
But do you think that there's a hidden assumption which doesn't need to be spelt out that if the fiscal policy side sticks to their lane and does things which you generally find to be helpful from a stable point of view then you will be helpful too. You don't need really to spell that out because as you say that would be undermining your independence if you did have a specific deal in mind. But should there not be almost like an expert system that links the brains of Threadneedle Street and the brains of the Treasury that you know if you step out of line you're going to get trouble from the other end of town. Is something like that in your mind?
Well, first of all I say we talk a lot about the economy. The second thing we do is that all our forecasts, I'll take it from our end, we condition our forecasts on announced fiscal policy. So our forecasts are conditioned on what the government has announced. So in that sense we're coordinating because we're saying you tell us, well you tell the country what your fiscal policy is. We will then use that as the basis to form our views on the state of the economy, to form our views on the forecast looking forwards for the economy. And of course it's not the only determinant of the decisions we take in monetary policy by any means, but it's an important one.
Yes, you've been around a long time as you were saying, you've seen most of these 30 years ups and downs. I do want to just ask you about one particular high or low point which of course was in 2022 when we had an incoming prime minister who didn't like you or didn't like the way the Bank of England was going about things and did threaten to undermine you, maybe even to ask you to go. That didn't work. In fact a gentleman at the other end of town went instead. And I think you don't have to be a Nobel Prize winner to work out why that was. How has that experience changed you, Andrew? I think myself, and you don't have to say this, I think it made you more or less unsackable. I think you were unsackable before, probably made you even more unsackable, but how does that affect you? Is that something which has somehow added to the philosophy that you might have as being an independent steward of monetary policy working from the Bank of England?
Well, first of all, as I understand it, Liz Truss is going to publish a book next week on this subject. I've not seen it. I've only seen the sort of, I saw the blurb yesterday actually, so I don't know what's in it. I can probably imagine, but I don't know what's in it. I've never met this Truss, so I don't know. I've never met her, so I'm not going to comment on this Truss because I just don't know. It was obviously a difficult period, I think, all around. It was quite a turbulent period particularly for markets. We had to respond to it and we did. And the interesting one, the big things I took from that period, was we faced a financial stability problem and we dealt with it. I think it was a very effective operation actually. People have said well should you have anticipated it. It was well out in the tail of the distribution of possible outcomes. I always say I think you have to in our world have both what I would call regulatory tools but you also have to have tools that operate in the tail beyond where regulation is cost effective. In other words, you have to have tools of intervention. I think this was out into that territory. We have got, we actually created the tools of intervention and we dealt with it and I think it was a successful operation.
Do you think in retrospect that in some ways you were quite fortunate because you did manage, I remember, to get the software sorted out for the index-linked gilts more or less over a weekend and that did allow you to meet your deadline. It was a risk wasn't it setting that deadline to say we're just going to give the market participants that amount of time and we've got to get our house in order in that time. I mean had that not worked then it could be that your job would have been quite difficult to hold on to. Was it luck or was it all just brilliant timing?
Well, let me say a few things on that and I do want to come back to what we learned from that period, but let me say on that that there were two, we set an original deadline when we started the operation and then I made a subsequent comment about you've got three days left to complete it. Just to be clear, the three-day comment came after we had sorted out the index-linked issue.
Let me also say on the index-linked issue, it was a game-changer in terms of completing the operation. We knew how much needed to be done because we were in very close contact. I always say we had a lot of inside information, we were in very close contact with the market.
This is where your market intelligence department plays a role.
We knew exactly pretty much exactly what needed to be done. We had always been averse to, we'd never taken in gilts in our operations, there was a sort of aversion to it, some other central banks do, we didn't. It became clear to us that to finish this thing off successfully we had to cross that bridge if you like, and we did. On the technical points about systems, I just take my hat off to my fantastic people who work with me, who I'm very lucky to have as colleagues, who yes fixed it over the weekend. They did it and it was successful.
Yeah, I think you invited them all for a cup of tea afterwards didn't you to celebrate.
With a cup of tea and a cake actually as well.
But to answer the original question, has that made you stronger? That which does not kill you makes you stronger. Would you agree with that?
Yeah, but look, I want to come back to the point that we learned from that. A lot of other central banks have talked to me subsequently about how they feel that the bank actually has created a very interesting and important initiative here. The thing that I was very concerned about, and why we had to set a time deadline in good part, was because, and we got some of this, you'll remember, quite a few people said well here you go, you're doing QE again. And of course this was a point where we were raising interest rates.
Yes, it looked like you were going against the grain didn't it, so that was a communication problem.
You're off to do QE because people always do QE. And I was very sensitive to that because we were not doing QE. It would have been crazy to do QE for monetary policy purposes at that moment in time. And so we had to distinguish what we were doing. Now I think what we learned from that was we were dealing with a financial stability problem. We need to have the tools to do both monetary policy interventions and financial stability interventions and to be able to distinguish between the two very clearly. And we learned that I don't think we had really before that period actually scoped that out quite as much as we needed to, nor other central banks. So out of that, that's the big lesson. You've got to have tools that you can use for financial stability interventions and you've got to be able to distinguish them from monetary policy tools, from QE tools, and to be convincing. Now I think we managed to do that because I think the fact that we, a lot of people thought we wouldn't end it, that we would.
This is right, this is why I persist and think you were actually a little bit lucky that you did manage, but anyway look let's not go down that path any more. Something I just wanted to go into, this issue that you were saying just now, if we did get to the zero bound again there'll be these three tools. It was interesting you mentioned fiscal policy but you mentioned negative interest rates, you mentioned QE. Do you think with the experience you've had also the difficulty of unwinding QE, you've just recently announced that you're not going to be doing the so-called quantitative tightening in quite the same way, it's going to take longer therefore to unwind it. Would I, I know your term ends fairly soon, but for any central bank governor in England in the future, in Britain in the future, would you say that the road barriers or the psychological hurdles for doing more QE have got that much larger, partly because we know it produces diminishing returns, but also because we know it's so damn difficult to get rid of this high balance sheet?
Well, I can tell you from personal experience, it's very easy to agree with you and end it there. It isn't easy. You may remember, we had a debate, I mean this seems like ancient history now, but we had a debate in 2020 about negative interest rates. Of course other central banks did it. I don't think it's an easy tool. I really don't. I was very, frankly, cautious about it at the time. I'm still cautious about it. I don't think that's at all easy as a tool. I don't think it's at all, I mean its effectiveness, I think, also has to be called into question. There are real limits on how much you can do because of the alternative instruments that are available that avoid it. And then I include fiscal policy, not because it's obviously not for us, but because if you look at, I mean I'm going to the textbooks here really, and the textbooks will say to you well those are the things you can do, none of them are attractive frankly. I don't think any of us would say yeah there's one in there that's an obviously attractive tool. There isn't.
Let's go into the famous issue of the indemnity. You've said in conversations with us as well in recent years, Andrew, that you'd be in favor of the Treasury publishing the famous indemnity regarding losses made by the Bank of England. And the House of Lords Committee asked twice for this in 2021, 2023. It took the Financial Times and Freedom of Information Act to actually get this indemnity letter released. I don't think the world is that much the wiser for this. We're a little bit the wiser. But why did it take so long when you wanted it?
Well, let me be clear. Of course, the indemnity is owned by the Treasury, not by the Bank of England. I put myself in the position obviously, as I said to the House, I remember saying to the House of Lords Committee just to reassure them. I'd obviously read it carefully. And I was worried that there was a degree of sort of conspiracy theory around this indemnity. I'm afraid when you read it, it wasn't a particularly exciting document, but it wasn't intended to be a particularly exciting one. It was never intended that way. It's a pretty dry document. So look, it's not for me to talk on behalf of the Treasury. From Bank of England's point of view, obviously our point of view was look, I don't...
We don't want conspiracy theories. There's enough stuff going on without having a conspiracy theory around the indemnity. But it was the Treasury's decision, because they have to look more broadly across the whole government.
Yes, and in terms of the effect of what you've announced recently on the balance sheet, you obviously do want to move as quickly as you can to a more narrow balance sheet structure, and you want to make this demand-driven. You don't want to have per se a high balance sheet going into the future times of history. Also very interestingly, you're going to be now selling back to the market a smaller amount of these gilts, but you're still going to be doing it — you're going to be doing it directly through the DMO rather than onto the market. Will that — I mean, the obvious question there goes back to my question about interaction with the Treasury. Does this in any way undermine your independence to the extent that you have to be talking to a very substantial arm now of the Treasury on an important issue like this? How do you see this affecting this?
Very firmly not. This may be because I'm sort of a practical person, but let me explain the thinking there. So we've laid out the amounts that we will do per annum for the remainder of the time needed to get down to basically where we're only left with the stuff that's back in the note issue. And we reckon once you take the natural maturities into account, that's 20 billion a year. So first of all, it's very important that we pre-commit to that number. So that takes off the table sort of: is there going to be some negotiation about how much? It then becomes what I'm afraid I think is a fairly mechanical issue about what is the most cost-effective way to deal with that 20 billion a year. Now the issue we've got is a sort of practical issue: that as we go through the sales, the stock that we are left with is increasingly comprised of off-the-run gilts. You might say there's a residue. And the cost-effectiveness of selling off-the-run gilts is obviously a question we have to have in mind, because the government quite rightly says you've got to do this for monetary policy purposes, but you've also got to achieve value for money. So I think it is most cost-effective from a value-for-money point of view to say, look — and we're still in discussions on this, so it's not finally settled — it is more cost-effective to sell them to the DMO, and the DMO can then repackage them and sell them as on-the-run gilts. We can't do that in the Bank of England; that's not in our remit.
And when you say cost-effective, you're talking really about the loss to the Exchequer — coming out of the Exchequer to pay you would be even higher.
The cash flow. The cash flow attached to them.
Yeah, well, it will be really interesting to look at how this actually works. I can see your point totally. Now I've got quite a few questions from the audience. I'm just going to read them out without saying who's put them. One really apposite question goes back to what you were saying before about the need for accountability. The person from the audience says: is it the case that because you have taken on macroprudential policy and banking supervision, you are in a way exposing a greater degree of your flank? The person in the audience says it triples the attack surface. Now, I know that's not been your decision, but is that how you see things as well?
Well, obviously it's a wider scope of public policy. So in a very literal sense, on that point, the answer is of course yes. But I would take you back to the financial crisis, and it's really the crisis out of which these changes come. I was obviously quite centrally involved in the Bank's work during the crisis. I'm afraid that I think the arrangements that were put in place, obviously going back 30 years now, which took bank supervision out of the Bank and did not set up an effective financial stability framework in the sense that we have it now, left us very badly exposed in the context of the financial crisis. I mean, I remember because I dealt with a lot of these operations. We had to come to terms with what we were dealing with, literally in terms of bank balance sheets, from a standing start, as it were, and I don't think that's a good place to be. We were very exposed collectively, as a country, on the financial stability front. So for me the benefits of having these things together in the central bank and being able to, in a sense, fit them together — because the pieces do have to fit together — substantially outweighs this exposing-more-flank point.
Yes, I can see that point. Another question from the audience goes back to this issue about the supply shocks and how many of them are coming along. And I think I'd bring this also into this issue about group think. This has come up from time to time also in various reports, including the House of Lords report. But the question says: how do you coordinate with other central banks, e.g. through your leadership of the FSB, to address the consequences of the supply shocks? Do you find yourself just going around in circles where everybody more or less agrees and says, 'Oh, isn't it terrible? We're trying to do the right thing.' Or do you actually find other central banks who come up with some really sharp focus points that help you to go down in a better direction?
Well, we obviously — central banks talk a lot to one another. Actually, I'm borrowing a phrase, a thing Eddie George used to say: I think I sometimes see more of my fellow governors than I do my family some weeks. But we do talk a lot, and I think that's very important. I mean, there's a reason why we end up in Basel so much, and of course have done for 100 years actually pretty much. It's very important, and I think that the institutional bond amongst central banks is both very strong, and I think actually, interestingly, it isn't there in other areas of public policy. I think it is very important. We were in Bangkok last week, so, you know, we've seen a lot of each other.
I know, but that's not really the point, Andrew, because there is a kind of wagon train mentality. I think particularly when central banks can be under fire, as they have been in the United States, they kind of band together — it's almost like a trade union, I find — and say, well, look, we're all in this together. For instance, Jerome Powell is getting a huge amount of support now. I think he did make some mistakes earlier on in his career, but because he's been so much under attack, everybody — they put the wagon train around him. I'm just wondering whether that sometimes can hinder rather than help the constructive exchanges of views, because you tend to agree with each other partly because you're under attack.
Well, let me — I'll talk to you about the Powell context. The point at which we, as other governors, decided to go public on this, in our view, was when it became an attack on him as a person, not because of what I would say Fed policy. I know him very well. I know other governors very well. I count Jay as a friend. I know Kevin Warsh very well as well. But I count Jay as a friend. He's a man of the utmost integrity. And I think it was the right reaction at that time to say: I'm sorry, we are going to stand by our friend. And I would do the same again, frankly.
Well, of course, the irony of it from the point of view of the President of the United States is that Mr. Powell, for reasons which only he knows, has elected to stay on — the first time for 75 years that the chair stays on the Board, where he's got a right to do that. And so, arguably, from an outside point of view, the Fed has now become more hawkish, shall we say, or more likely to stick to a firm monetary policy than it might have done had he gone in the normal order of things. So would you like to comment on what seems to be a historical irony?
