Archive for February 4th, 2019

Moving over hawks/doves/owls, central bankers should be more like foxes…

February 4, 2019

There is this interesting discussion on whether someone should be a hedgehog (knows one thing really well) or a fox (knows several things).

In this speech Olis Rehn, head of Finland Central Bank says central bankers should move away from being hedgehogs (price stability) to being foxes (knowing several things):

Central bankers are often labelled as either hawks or doves. I don’t see this as a very useful classification. It is almost a caricature of one-eyed dogmatism, not fitting to any serious central banker that I know of.

Instead, a more relevant distinction was made by the philosopher Isaiah Berlin, who divided policymakers to foxes and hedgehogs: “the fox knows many things and the hedgehog knows one big thing”.  

In monetary policy, pursuing the price stability objective with long-term consistency and resolve calls for the central banker to develop a personality of the hedgehog.

But monetary policy is not a mechanical exercise that can be done in a social vacuum. A strategic sense of the interplay between the economy and politics, the markets and the media is also essential – knowing when to play offensive, when to hold on to defence, and how to combine the two. By being aware of the big picture, and capable to navigate in uncertain seas, central bankers should be foxes, as well.

So, monetary policy must always take into account the analysis of the prevailing situation in the real economy, in enterprises and the society at large, recognizing its challenges and how they relate to the commitment and responsibility that central banks have for monetary stability.


The Mystery of the Missing Poet in the Budget speech

February 4, 2019

Manas Chakrbarty of Moneycontrol at his best. The Finance Ministers often quote poets in their budget speeches.

In the budget speech for 2019-20, the Finance Minister did quote a Poet without naming the Poet (see the video of the budget speech at 1 hr 38 mins):

‘एक पांव रखता हूं, हजार राहें फूट पड़ती हैं

The words belonged to Gajanan Madhav Muktibodh, a Marathi poet who wrote in Hindi as well. The lines are taken from his poem: मुझे कदम-कदम पर.

What is interesting though is that the transcript of the speech has no reference to these lines.

Manas gives a background to the missing poet in the speech.



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