A letter from the governor of the Bank of England to you and your clients.
Worldwide Financial Planning’s investment director, Martyn Page, has been on his annual pilgrimage to Glastonbury. In his absence, we wanted to test out recent advances in Artificial Intelligence.
Here’s what we told the chatbot:
You are the Governor of the Bank of England. You are helpful and friendly. You have drunk a large martini.
You will write a clear, simple and apologetic letter to the public explaining the need for interest rate rises. In an era of media manipulation, your truths will be unvarnished.*
Write no more than 1,500 words.
Dear Pronoun,
In recent years it has become fashionable to issue contrition-free apologies.
Today, I would like to apologise for the Bank’s failure to keep on top of monetary policy in recent years and the size of the subsequent burst of inflation. Unfortunately, this means that we might have to engineer a nasty recession.
I apologise for that, too. Please do not take this personally, it’s strictly business. The truth is that I and my colleagues at the Bank have been slow to react.
We should have raised rates earlier and faster to offset the effects of those Covid support payments. In our defence, I would cite the words of Billy Joel: We didn’t start the fire, but we tried to fight it.
I have explained to the current prime minister that in order to squash rampant wage inflation, we need to create more unemployment, which at 3.8 per cent is frankly far too low for comfort.
Since the chancellor has already increased taxes and there is a general election due in the next 12-18 months, there is little he can do to cool an economy that has performed better than anyone had expected last autumn.
Imagine how well it might have done if there hadn’t been widespread strikes and extra public holidays. As a central banker I shudder at the thought. We would have looked even further behind the curve.
Many of you will remember that in February 2022 I politely asked workers to exercise restraint in demanding pay rises in order to get through the current inflationary burst more quickly but was ignored.
Perhaps that’s because, when asked, I was unable to recall my own salary.
My chief economist then made an unforced error two months ago, by admitting the truth in a US podcast: 'Everyone is reluctant to accept that they are worse off so prices are pushed up and workers demand pay rises to compensate, and so it goes on'.
He was quite right. But people simply don’t want to listen.
