Demystifying some of the jargon used in the global money markets...

"This is what I call the Maradona theory of interest rates. The great Argentine footballer, Diego Maradona, is not usually associated with the theory of monetary policy. But his performance against England in the World Cup in Mexico City in June 1986 when he scored twice is a perfect illustration of my point. Maradona’s first 'hand of God' goal was an exercise of the old 'mystery and mystique' approach to central banking. His action was unexpected, time-inconsistent and against the rules. He was lucky to get away with it.

His second goal, however, was an example of the power of expectations in the modern theory of interest rates. Maradona ran 60 yards from inside his own half beating five players before placing the ball in the English goal. The truly remarkable thing, however, is that, Maradona ran virtually in a straight line. How can you beat five players by running in a straight line?

The answer is that the English defenders reacted to what they expected Maradona to do. Because they expected Maradona to move either left or right, he was able to go straight on."

Mervyn King Governor of the Bank of England. Monetary Policy: Practice Ahead of Theory. Mais Lecture 2005.