Diego Maradona offers central bankers enduring lessons

Speaking in 2005, Mervyn King, then governor of the Bank of England, outlined his “Maradona theory of interest rates”. The great Argentine footballer’s performance at a World Cup match against England in 1986, Lord King argued, was the perfect illustration of how central bankers ought to conduct monetary policy. Running 60 yards from inside his own half, Maradona skipped past five opponents, including England’s goalkeeper, before slotting the ball home. Even more astonishing, he mostly ran in a straight line. By duping defenders into thinking he would change direction, he scored while scarcely having to do so. To Lord King, the lesson for central bankers was clear. Guide investors’ expectations of future interest rates deftly enough, and an inflation target can be met without changing the official rate at all.