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In its December 2016 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of Six to Three, to raise rates in December.

Advocates of rate rises noted the rapid growth in the broad money stock in the year to September 2016. Two contended that this can be seen as heralding the end of the 2008 crisis, with one of these (Greenwood) making his first vote to raise rates since 2008. Others noted that the depreciation of sterling in recent months (albeit partially reversed since mid-October) provides the Bank of England with an opportunity to raise rates. One asked: “If not now, when?”

Those advocating a hold noted that although monetary growth has been rapid, credit growth has not, and felt that it would be better to wait before raising to reflect upon the impact of the triggering of Article 50. All three of those advocating a hold at this stage expressed a bias to raise in forthcoming months.

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. The next SMPC poll will be released on Sunday 29th January 2017.

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