Central banking is a funny old game. Mervyn King knew this in 2005 when he expressed the “Maradona theory of interest rates” as governor of the Bank of England. Lord King was talking about central bankers’ ability to move markets with words, changing the restrictiveness of policy while allowing central bankers to glide along doing nothing.
It was, he said, rather like the Argentine striker running in a straight line to score against England in the 1986 World Cup quarter-final, while English defenders danced around him, always expecting a move to one side or the other.
Since governor King made his analogy, forward guidance and financial conditions have become a key part of central bankers’ tool kits. And this was on display in the March meetings of policy committees around the world.