Exclusive! Mark Carney’s letter to the chancellor that was never sent

But he did plan a letter in his head - and it is that which I have obtained exclusive access to.

Article updated: 15 November 2017 10:00am Author: Michael Baxter

Inflation stayed on hold last month, and since that means inflation wasn’t more than one per cent over target, there was no need for the Bank of England’s governor to write to the chancellor. But he did plan a letter in his head - and it is that which I have obtained exclusive access to.

Dear Chancellor

I gather from the Foreign Secretary that the thing that makes us re-moaners so toxic is not what we say, it is what we think. So, following his advice, “I am clarifying my mind” and “internalising the logic” of the world according to Boris.

As you know I am required to write a letter to you if inflation rises by more than one per cent over the two per cent target. In September, inflation was three per cent, many thought it had risen in October, but no, it stayed put, thus saving me the need to write a letter - which is a good thing as my printer has run out of ink - blame austerity for that, although I guess the Bank of England could start printing ink - quantitative inking.

Anyway, I may not have to write a letter, or indeed have the resources to do so, but I have mentally drafted one - whilst I struggle to internalise the Johnson/Gove logic.

There is no need to panic about inflation. Its recent rises are down to one-offs. And unless the Prime Minister makes a silly mistake, like calling a referendum on something, not sure what, anything really, or unless she comes across as a lame Prime Minister, like failing to fire a senior minister who is mean to her, causing sterling to fall again, I reckon inflation will fall back eventually as the pound stabilises.

Yes, I know, core inflation, which is the measure I am supposed to watch, stayed at 2.7 per cent, but you can blame the cheaper pound for that.

By the way, falls in the pound, after the brilliant decision to call a June election, may create another one-off boost to inflation next year.

But you see, my dear Philip, a cheaper pound is positive, it will boost exports. As John Redwood said in 2010, a falling pound is a good thing.

Anyway, as both you and Mrs Hammond know, the real problem is that across the developed world there is a chronic shortage of demand, and the only way the economy can really get moving is if we see a massive stimulus, so that either means governments must borrow a lot more than they already are, the private sector must borrow a lot more, or me and my chums at the Bank of England go for some quantitative inking over private and public debts by creating money.

Anyway, I must go, the Foreign Secretary has given me this great book to read about internalising logic and clarifying one’s mind in favour of the what the government is thinking, it’s by a chap called George - no, not Osborne, I think his name is Orwell.

All the best

Mark (Canada’s next Prime Minister - if only Justin Trudeau wasn’t so young) Carney.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

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Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.