Shadow Monetary Policy Committee votes Six / Three to Hold Bank Rate in December



No-Deal Fear Checker, No 8

Monetary Policy

A critical assessment of UK monetary indicators

SMPC votes Six / Three to Hold Bank Rate in December

In its December 2018 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of six to three, to hold rates in December. The three favoured a 0.25% rise.

Advocates of holding rates noted that broad money growth continues relatively weak, with some saying that the Bank should consider re-starting quantitative easing if broad money growth does not accelerate soon. Others suggested that with uncertainty about Brexit remaining high, now was an infelicitous time for a rise.

Advocates of raising rates noted that the UK economy continues to grow steadily, unemployment is low, and concerns about the impact of Brexit should not deter policymakers from continuing the process of monetary policy normalisation now, given that rates remain far below their equilibrium levels.

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.

Fullscreen Mode