LONDON Oct 18 Unless central bankers stop
sowing discord by inflating a bubble with make-believe money,
the world's top central banks will find their independence
challenged, former Conservative Party leader William Hague was
quoted as saying on Tuesday.
"Central banks collectively have now indeed lost the plot,"
Hague, a former foreign minister, said in an article in the
Daily Telegraph newspaper. "They are blowing up a bubble of
make-believe money to avoid immediate pain, except for
penalising the poor and the prudent."
"Like doctors keeping their patients on a drip many years
after an operation, they are losing credibility and producing
very dangerous side effects," Hague, who led the Conservative
Party from 1997 to 2001, said.
Bank of England Governor Mark Carney on Friday hit back at
criticism from British Prime Minister Theresa May of the central
bank's low interest rates, saying that he would not "take
instruction" from politicians on how to do his job.
May, promising to heed the protests of voters who decided to
take Britain out of the European Union, took the unusual step of
publicly highlighting the "bad side-effects" for savers of the
BoE's near-zero rates and said a change had to come.
Hague said that by pursing the emergency policies designed
to cope with the 2008 crisis, central bankers were becoming
unpopular and that unless they changed course, their
independence would come under attack.
"Theresa May warned in her conference speech about low
interest rates fuelling inequality. Donald Trump rages against
the chair of the Fed, Janet Yellen," Hague said in an article
titled "Central bankers have collectively lost the plot. They
must raise interest rates or face their doom".
Hague said the impact of current central bank policies was
that savers found it hard to earn any return on their money,
asset prices inflated the wealth of the rich, pension funds had
poor returns and "zombie companies" stayed in business because
they could borrow cheaply.
Unless central bankers - including at the Bank of England -
stopped, then their independence will be challenged, Hague said.
Carney has not yet decided whether he wants to stay on after
his agreed terms expires.
(Reporting by Guy Faulconbridge Editing by Jeremy Gaunt)