IEA’s SMPC majority warns that Bank of England risks losing inflation credibility
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One explanation of why other SMPC members thought that it was better to hold Bank Rate was the apparent weakness of UK activity in late 2010. Nobody doubted that the negative fourth-quarter growth figure was distorted by December’s severe winter weather. However, the doves believed that there had been either a ‘growth pause’ or a small fall once the weather distortion was removed. The counter view was that reduced oil production, a worsening in the trade deficit on real non-oil exports, and a growth in the negative national accounts discrepancy had also distorted the figures and that real private-sector home demand was still recovering at a satisfactory pace. Other reasons for wanting to hold rates were the slow growth of broad money and concern about the possible consequences of the government’s fiscal retrenchment.
The SMPC is a group of independent economists who have gathered quarterly at the Institute of Economic Affairs (IEA) since July 1997. That it is the longest established such group in Britain and meets regularly to debate the deeper intellectual issues involved distinguishes the SMPC from the similar exercises carried out by a number of publications.
Notes to Editors
To arrange an interview with a member of the SMPC, please contact Stephanie Lis, Communications Manager, 077 5171 7781, 020 7799 8900, [email protected].
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.