Bank of England governor Andrew Bailey has warned that the spread of populism poses a major threat to global institutions and risks undermining improvements in living standards.
Speaking to the Bellagio Group of economists and central bankers, Mr Bailey argued that international bodies must stand firm against populist movements.
“Part of the purpose of international agencies is that from time to time they have to tell us what we don’t want to hear, let alone act upon,” he said.
The governor stressed that while such organisations must remain accountable for their assessments, criticism of their work amounts to attacking those delivering unwelcome truths.
“We have to call out messenger shooting,” he stated.
His remarks come as world leaders prepare to gather in Davos for the World Economic Forum.
Mr Bailey was among a group of 10 central bank governors who this week declared their support for Federal Reserve chairman Jerome Powell.
The signatories, which included European Central Bank president Christine Lagarde along with central bank heads from Sweden, Canada and Australia, expressed “full solidarity” with the Fed.
They emphasised that preserving central bank independence was “critical”.
The joint statement followed Mr Powell’s revelation that he faced the threat of criminal prosecution.
The Fed chairman disclosed in a video statement that he was being threatened with indictment over testimony concerning renovation projects at the central bank’s buildings.
Bank of England Governor Andrew Bailey warns the UK is ‘not out of the woods’ regarding inflation | Getty Images
Mr Powell described this “unprecedented action” as part of a wider pattern of pressure from the Trump administration.
Mr Bailey outlined three key characteristics of populism in his address.
The first is a preference for domestic production rather than international openness.
The second involves blaming unfavourable circumstances on external forces instead of recognising shared challenges.
The third characteristic, he said, is “encouraging a decline in trust such that institutions domestic and international are viewed as distant, unresponsive and acting for the benefit of powerful and uncontrollable interests.”
Jerome Powell has accused the White House of trying to intimidate him into forcing down interest rates
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The governor urged those working within global institutions to respond robustly to these trends.
“For those of us who are institutionalised, the answer is that we have to challenge back, in deeds more than just words,” Mr Bailey said.
He added that institutions must also ensure their own affairs are properly managed.
Mr Bailey did not name specific countries or leaders in his speech, though his comments coincide with Donald Trump’s intensifying conflict with the Federal Reserve.
Mr Bailey signed a joint letter regarding the need for independent interest rate setting
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PAThe US President has repeatedly attacked Mr Powell and the Fed for not reducing interest rates as swiftly as he would like.
Mr Bailey acknowledged that years of weak economic growth and flat living standards have complicated efforts to champion global openness.
“While it is true that openness supports growth and has reduced global poverty, it can have, and has had, distributional consequences in economies,” he said.
However, he maintained that isolationist policies cannot address the world’s current challenges.
