An email poll of members of the Shadow Monetary Policy Committee (SMPC) carried out in late August, and early September 2019 resulted in a vote to keep interest rates on hold by six to three, the same margin as in July.

Three dissenters wanted to raise rates by ¼% immediately and then gradually to around 1½%. Six members voted to keep Bank rate at 0.75%. In terms of the bias to the policy stance, five members were for further tightening, three were neutral and one for loosening.

Slower UK and global growth, continuing Brexit uncertainty and the prospects of a no-deal EU exit prompted six members to vote for a hold. Worries about the immediate disruptive impact on demand and supply in an economy already contracting were cited as factors in the decision to hold rates. Fears of a further fall in output in Q3 and continuing slow expansion in broad money were also influential.

Three members thought that monetary policy needed to be tightened to help restore its effectiveness as a policy tool. The buoyant UK labour market and the resilience of consumer spending were signs that the economy could withstand a tighter stance. One thought that fiscal expansion was required to mop up excessive savings. Such an action would help to drive up rates and help restore monetary policy to a position where it could act as a counterweight to fiscal policy – and regain its effectiveness – in investment decisions.

All agreed that these were extraordinary times and that the aftershocks from the last crisis still reverberate as does the policy reaction to it.

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