Select Committee on Treasury Minutes of Evidence

Memorandum submitted by the Bank of England


  The TSC have asked for a document that sketches out the links between the Inflation Report, the Inflation Report press conference and the MPC minutes. Some of that detail is already provided in "The formulation of monetary policy at the Bank of England", by Charles Bean and Nigel Jenkinson, Bank of England Quarterly Bulletin Winter 2001 (attached as an Annex[2]). This document draws together a chronology of the main meetings that link the policy decision, the Report, the press conference and the minutes.

Date relative to MPC meeting
Inflation Report draftsOne to two weeks before Drafts of Sections 1-5 of the Inflation Report circulated to all MPC members.
Pre-MPC briefing meetingFriday before policy meeting Half-day pre-MPC briefing meeting.
MPC meeting    Committee votes on interest rates and signs off on the forecast, in light of the decision.
Inflation Report drafting meetings Day after (Friday)Overview and Section 6 of the Report discussed and agreed by the Committee in the morning. Where necessary, the Committee meets again in the afternoon to agree the text.
Inflation Report published with press conference Wednesday afterPress conference given by Deputy Governor with responsibility for Monetary Policy. Speaking note is based on Inflation Report overview and checked with Chief Economist and other staff for consistency with the Inflation Report.
MPC speechesAfter publication of the Inflation Report MPC Members at liberty to make speeches after purdah finishes at midnight on the day the Report is published.
Draft minutes circulatedWeek following policy meeting Draft of the Minutes circulated and comments from the Committee members incorporated.
Minutes meetingMonday (second week after policy meeting) Committee meets and signs off Minutes.
Minutes publishedWednesday 13 days after policy meeting Publication of minutes at 9.30 am.
MPC speechesAfter publication of minutes MPC members at liberty to comment on reasons for their vote.


  As set out in the annual report (page 57), Court receives a monthly report from the MPC under Schedule 3 of the Bank of England Act 1998 and all members of the MPC are invited to attend Court for that discussion, and for discussions of the MPC's procedures.

  The Act gives the sub-committee of non-executive Directors (NedCo) the task of reviewing the procedures followed by the MPC, including determining whether the committee has collected the regional, sectoral and other information necessary for the purposes of formulating monetary policy. As described in the annual report, NedCo decided to rely as far as practicable on discussions in Court. NedCo meets frequently (eight times over the last year) to satisfy itself that its functions are being discharged adequately in Court.

  The annual report notes that in reviewing MPC procedures non-executive Directors:

    —  attend pre-MPC meetings;

    —  hold discussions with MPC members, collectively and individually, and with the Treasury representative at the MPC, and others;

    —  review the minutes of the monthly MPC meetings and summaries of other MPC meetings;

    —  review the quarterly Inflation Report;

    —  visit the Bank's Agents and take part in their activities; and

    —  review examples of regional sectoral and other information collected by the MPC during the year.

  Their review also includes:

    —  the workings of the Service Level Agreement between the ONS and the Bank. (The SLA covers the provision of data to the MPC);

    —  the resources available to the MPC;

    —  comments made by outside experts who have attended the pre-MPC meetings;

    —  the views of other external commentators on MPC processes.

  The following table sets out the timetable of the process by which Court and NedCo reviewed the procedures of the MPC in the period leading up to the 2002 Annual Report. Where discussions take place in Court, they are reviewed again by NedCo in its own meetings. The table excludes the statutory monthly MPC report to Court, which is also reviewed again in NedCo. The report takes the form of a substantial discussion in Court in which most MPC members participate. The report is verbal, supported by charts, except in Inflation Report months.

September 2001
Presentation to Court by ONS Executives.
Agent's "Issue of the Month". Twice a year presentation by one of the Bank's Agents to give Court a direct demonstration of the content of Agents' presentations to the MPC.
Twice-yearly discussion of other MPC meetings (ie not the regular monthly policy and quarterly Inflation Report meetings.)
Discussion of resources for the MPC including IT and personnel issues in Monetary Analysis.
Discussion of the programme to build a constituency for low inflation.
January 2002
Discussion of the provision of regional and sectoral information to the MPC.
Discussion of feedback from senior officials from other central banks and economic institutions who have attended the pre-MPC meetings.
Annual review of Service Level Agreement with the ONS.
Discussion of external comments on MPC procedures over the previous year, including points made by the Treasury Committee.
NedCo discusses the format and content of its own annual report, and key questions to be submitted to the MPC collectively and to each individual member.
Discussion of the work of the Agents over the previous year. Three Agents attend.
Agent's "Issue of the Month". As in October, an Agent gives Court a presentation previously given to the MPC.
Non-policy meetings of the MPC, twice-yearly discussion, as in October.
Annual Report discussions.
    (i)  Draft Assessment of the Bank's performance
    (ii)  Draft report on the MPC's processes
    (iii)  Strategy & Objectives for the year 2002-03.
Item (ii) is the report on MPC processes by the Bank executive. Although items (i) and (iii) cover the whole breadth of the Bank's responsibilities, they also contain discussion of MPC related issues eg (i) includes issues such as support for the MPC and also the programme to build a constituency for low inflation, and (ii) covers inter alia the strategy and objectives for Monetary Analysis. All three items on the agenda are reviewed subsequently by NedCo.
Discussion of the responses from the MPC to the questions agreed in February.
A discussion of the NedCo chairman's draft report.
Approval of NedCo's report.

2   Ev 39.Timetable for a typical Inflation Report round Back

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