Although there was a majority vote that interest rates should be kept unchanged, all agreed that they needed to be raised soon. The difference of opinion was about when rates should rise, before or after QE is curtailed. There was no consensus as to whether the second QE programme should be completed, stopped, or reversed. Some members wanted to continue the existing QE announced programme but finish it early, while others felt that no further QE should be undertaken.
Three members said that QE should be reversed now. The two members who voted to raise rates immediately and reduce QE felt that the risk of delay was greater than acting now. They thought that a modest rise now, to perhaps 0.5%, would send a signal that would embed current low inflation expectations and reduce the shock effect of a rate rise later on.
There was unanimity that the Debt Management Office (DMO) should lengthen the maturity of public sector debt to lock in the current low level of rates as much as possible.
The SMPC is a group of economists who have gathered quarterly at the IEA since July 1997, with a briefer e-mail poll being released in the intermediate months when the minutes of the quarterly gathering are not available. That it was the first such group in Britain, and that it gathers regularly to debate the issues involved, distinguishes the SMPC from the similar exercises carried out elsewhere. To ensure that nine votes are cast each month, it carries a pool of ‘spare’ members. This can lead to changes in the aggregate vote, depending on who contributed to a particular poll. As a result, the nine independent and named analyses should be regarded as more significant than the exact overall vote.