Success at Bank of England competition
On Friday, five sixth-formers journeyed to a Cheshunt hotel for the first round of the Bank of England’s prestigious Target 2.0 competition. Competing against seven schools including Haberdasher’s Aske’s Boys & Girls, Haileybury and Long Road, the team gave a 15-minute presentation on the state of the UK economy, and then recommended the most suitable course of monetary policy that the Bank of England ought to pursue. The Bank’s innovative “forward guidance” on the course of monetary policy provided a new flavour to the competition, with the best teams grappling to analyse the extent to which discretionary monetary policy has been constrained by the public pronouncements of the new Governor Mark Carney.
The Perse team, comprising Dylan Spielman, Georgina Evans, Charlotte Grace (all Upper Sixth), Hannah Kirk and Hugh Goddard (both Lower Sixth) particularly impressed the judging panel of three senior Bank of England staff with their innovative flow chart depicting the necessary decision process. This led the team to conclude that there was insufficient cause to abandon forward guidance, and to stick with a base interest rate of 0.5% and quantitative easing of £375 billion.
However, the team took the somewhat risky, and certainly contentious, step of arguing that the system of forward guidance was imperfectly designed, and that a more powerful way of supporting the nascent “green shoots” of the economy would be to migrate to a temporary nominal GDP level target, rather than an inflation rate target. This radical suggestion certainly caught the attention of the judges, and exposed the team to plenty of challenging questions. The team dealt with these questions superbly, displaying a depth and coherence of analysis that was truly astounding. One of the judges (who had taught postgraduates at the LSE) afterwards praised the team saying that our performance would have been worthy of final-year undergraduates. A second judge told us that we had “swept the field” and “completely nailed the questions”.
The Perse won this first round, so can now look forward to the regional final in February. The team worked exceptionally hard for this success, but could not have done it without the fabulous support given by Mr Proud in the run-up to the competition.