Beware: Geeks bearing tells

Stephen Hansen and Michael McMahon are watching central bankers for you;

... if Mark Carney [new head of the Bank of England] is inherently a dove [on inflation expectations], and he wishes to establish credibility as a tough inflation fighter, his early moves will involve attempts to signal hawkishness to the market. This would mean that his behaviour as the new Bank of England governor is an overstatement of his true level of hawkishness.

However, the standard signalling logic relies on central bankers wishing to prove that they are tough on inflation in order to anchor inflation expectations from a tendency for over-inflation. This has been the case over most of the economic times since the establishment of the Monetary Policy Committee in 1997. However, there may be periods, such as when the economy is particularly weak or especially when it is in a liquidity trap, when policymakers instead wish to raise inflation expectations. Such circumstances would generate the reverse predictions about policy behaviour; members would be more dovish at the start of their tenure and, with experience, become more hawkish. This is because higher inflation expectations lower (ex-ante) real interest rates and incentivise both investment, which has been particularly weak in the UK as discussed by The Economist (2013), and consumption. The recent appointment of Haruhiko Kuroda, a much more dovish Governor of the Bank of Japan who has committed to aggressive monetary easing, might be well-captured by such dovish incentives.

Or, give the guy a second chance to make a good first impression.