Talking Down Stocks Isn’t a Central Banker’s Job

Should central bankers be in the business of saying that the stock market will fall or that private markets are in a credit crunch? In a BBC interview last week, Sarah Breeden, the Bank of England deputy governor responsible for financial stability, said: “There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.” This strikes me as mission creep.

It’s certainly unusual for policymakers to explicitly say markets are overvalued. Experience suggests such remarks rarely age well. Furthermore, the only investors her comments are likely to resonate with are UK domestic retail savers. The global institutional investors that dictate market values will just shrug — if her concerns even register.