Mervyn King gets a “B” grade from economists… for the time being
As is now customary for retiring central bank chiefs, Bank of England Governor Mervyn King has received a warm – but not a standing – ovation from economists for his time in charge.
But if there’s one thing the last few years have shown, it’s that the legacy of prominent central bankers can sour quickly after retirement.
King received a median 7 out of 10 score for his 10 years as Bank of England governor from 39 economists polled by Reuters this week.
Although the general tone was favourable, there was a wild range of opinion.
One economist was so appalled by his governorship that he awarded him 1 out of 10.
Another thought he was nothing less than a triumph of modern central banking, giving him 10 out of 10.
Most had a bittersweet view of his achievements.
“Sir Mervyn has generally reacted well to circumstances in the last five years, despite a slow start in the wake of the Northern Rock bankruptcy. But the BoE was guilty of turning a blind eye to the build-up of liquidity prior to 2007 and must accept its share of the blame for some of the imbalances which built up.” –Peter Dixon, global equities economist, Commerzbank
“(He) handled the early days of the financial crisis badly but partly redeemed himself by withstanding pressure for tightening when inflation rose.” -Brian Hilliard, chief UK economist, Societe Generale
When Jean-Claude Trichet stepped down as president of the European Central Bank in October 2011, economists gave also him 7 out of 10 for his leadership during the financial crisis.
It would be interesting to see if that would still be the case, even just 18 months later.
The two interest rate hikes that took place in the last year of Trichet’s term are now viewed by many economists as a disastrous prelude to the euro zone’s relapse into a recession – one that has now become its longest-ever.
And look back at Reuters copy from 2006 shows near-universal acclaim from market economists for Alan Greenspan when he stepped down, after heading the U.S. Federal Reserve for more than 18 years.
Like other figures from economic history, Mervyn King’s legacy could look very different in the years to come.