LONDON, March 6 (Reuters) - The Bank of England plans to consult the public more in order to understand the economy better and give Britons more confidence in its decisions, BoE chief economist Andy Haldane said on Tuesday.
Haldane said trust in the central bank, along with other public institutions, weakened after the 2008-09 financial crisis, and maintaining public confidence was essential for it to be effective.
“Credibility and trust are the secret sauce of central banking,” he said at an event hosted by the Royal Society of Arts (RSA), a public policy think tank. “An economic or financial policymaker without credibility, history tells us, ceases to be a functioning policymaker.”
Britain’s economy was slow to recover after the financial crisis. Despite low unemployment, average wages adjusted for inflation have been essentially stagnant over the past decade.
Haldane did not directly address the outlook for interest rates or the economy. Last month he said rates might need to go up faster than investors expected after the BoE raised them for the first time in a decade in November.
The BoE regularly speaks to businesses across Britain through its regional offices and in recent years has included other groups such as trade union branches and charities.
The RSA published a report on Tuesday urging the BoE to set up a formal mechanism to speak to members of the public in different parts of Britain - a suggestion which Haldane said he was happy to accept.
“Our view of the economy, and our setting of economic policy, will be greatly enhanced by this wider panorama. It will give the Bank a new lens on the economy’s hidden corners, a new set of often-quieter voices to listen to and learn from,” he said.
Haldane said that on visits to different parts of Britain in the past two years, he had been struck by public concern about inflation following the Brexit vote in June 2016 which pushed down the value of the pound. He also said people were worried about the failure of areas outside London and southeast England to recover fully from the 2008-09 recession.
“Although the Bank’s policies only operate at a national level, this is important context for how we and others communicate about the economy,” he said. (Reporting by David Milliken Editing by William Schomberg)