The formulation of monetary policy at
the Bank of England
This article describes the internal processes
adopted by the Monetary Policy Committee and the Bank for the
formulation of monetary policy. It covers the regular monthly
policy round as well as the quarterly forecast round and the preparation
of the accompanying Inflation Report.
In May 1997, the Bank of England Monetary Policy
Committee was created by the Government to set interest rates
in the United Kingdom. The Committee was charged with the responsibility
of maintaining price stability as a necessary foundation for the
maintenance of sustainable economic growth with high levels of
employment. The specific policy objective is reviewed annually
by the Chancellor of the Exchequer. But to date, the Committee's
goal has remained the pursuit of a target of 2.5 per cent for
the annual rate of change in the retail price index excluding
mortgage interest payments (RPIX). This target applies at all
times. Subject to the primacy of maintaining price stability,
the Committee must support the Government's economic policy, including
its objectives for growth and employment.
The Committee has nine members: five with executive
responsibilities in the Bank (the Governor, the two Deputy Governors,
the two Executive Directors with responsibility for monetary policy
analysis and monetary policy operations respectively) and four
other members appointed by the Chancellor of the Exchequer. Each
member of the Committee is individually accountable for his or
her monetary policy judgment. Decisions are taken by a simple
This article explains how the Committee currently
discharges its main responsibilities, and describes the key internal
processes it has adopted. These processes have evolved over time,
and the Committee and the Court of Directors of the Bank review
them regularly to ensure that they work efficiently and that they
conform to best international standards.
The first section of the article provides a
very brief summary of the transmission mechanism of monetary policy,
which provides the context for the processes adopted by the Committee.
The second section focuses on the monthly policy round. The third
covers the production of the quarterly forecast and the publication
of the Inflation Report. Subsequent occasional articles
in the Bulletin will explore particular aspects of the
processes in more detail.
In the standard description of the transmission
mechanism found in most economics textbooks, monetary policy affects
inflation by first impacting on the level of aggregate demand,
as households and businesses respond to (say) an increase in interest
rates by increasing their savings and reducing their investment.
This in turn reduces tightness in labour and product markets and
consequently exerts downward pressure on wage and price inflation.
In practice, the transmission mechanism is considerably
more complex than this.
Changes in official interest rates may be passed on incompletely
into retail lending or saving rates, while the response of long-term
interest rates, which may be more relevant for investment decisions,
will depend on how the policy action affects market participants'
expectations of future short-term rates and inflation. These changes
in official and market rates are also likely to affect the value
of equity and housing wealth, which, in turn, will affect spending.
An increase in the official interest rate may well also lead to
changes in the exchange rate, which will have both a direct effect
on retail goods price inflation via import costs, as well as an
indirect effect via aggregate demand through the impact on net
trade. Moreover, changes in interest rates are likely to affect
consumer and business expectations of future inflation and this
in turn will affect their spending and pricing decisions.
So the transmission mechanism from monetary
policy to inflation is complex. Moreover, the strength of the
different channels is likely to vary over timefor instance,
high levels of indebtedness will tend to make consumers and businesses
more sensitive to changes in interest rates. And a key difficulty
in the formulation of monetary policy is the fact that changes
in interest rates invariably have their full impact on the economy
only after a considerable time lag. Typically, the bulk of the
effect on aggregate demand can take a year or even longer to come
through, while the full effect on inflation can take up to a further
year to manifest itself. These "long and variable" lags
mean that monetary policy can do very little to affect the current
inflation rate, but must instead look at prospective inflation
developments a year or more ahead. Thus an evaluation of medium-term
inflation prospects must inevitably play a central role in the
monetary policy process. Likewise, the monthly news on economic
trends and financial market developments must be interpreted in
terms of its likely impact on future, rather than just current,
The Committee reviews the setting of monetary
policy monthly to a pre-announced schedule.
Each monthly cycle contains three elements:
Briefing in advance of the policy
The two-day policy meeting culminating
in the interest rate decision, which is implemented immediately.
Production and publication of the
The timetable for a typical round is shown in
Table A. The three components of the process are described below
TIMETABLE FOR A TYPICAL MONTHLY ROUND
|Throughout the month||Circulation of briefing material and analysis of data releases and market developments by staff.
|Friday before policy meeting||Half-day pre-MPC briefing meeting.
|Monday/Tuesday||Staff undertake follow-up work requested by the Committee.
|Wednesday||Policy meeting commences early afternoon. Committee identifies the key issues and debates their implications for inflation prospects.
|Thursday||Policy meeting concludes. Committee members provide their assessment of the appropriate policy stance and vote on the level of interest rates. Policy announcement at noon. Decision implemented immediately in a round of open market operations at 12:15 pm.
|Week following policy meeting||Draft of the Minutes circulated and comments from Committee members incorporated.
|Monday (second week after policy meeting)
||Committee meets and signs off the Minutes.
|Wednesday (two weeks after policy meeting)
||Publication of the Minutes at 9.30 am.|
Information on economic and financial developments and prospects
in the United Kingdom and overseas is released throughout the
month. On most days new information becomes available, either
from the release of economic data or from the publication of surveys
of business trends or consumer sentiment. Financial market participants
react to this information as well as to news on the performance
of individual companies and to any perceived changes in the outlook
for economic policy. That reaction is in itself economic news,
which is also relevant to the Committee's decision.
Committee members monitor this economic information carefully.
For all major UK data releases and surveys, Bank staff circulate
a short analytical "indicator" on the day of publication
that summarises the new data and identifies and analyses the key
trends. Releases of data on the major overseas economies are also
circulated, with analytical comments added by Bank economists;
a weekly summary of international economic developments is also
provided. Financial market movements are monitored on a continuous
basis by Bank staff and a weekly note interpreting the main developments
is provided to the Committee.
Economic data releases and movements in financial markets
often raise issues that warrant additional analysis. For example,
do recent movements in import prices suggest a change in the pricing
behaviour of foreign suppliers to UK markets? To what extent might
compositional changes in employment explain the surprising strength
of manufacturing earnings growth? How close is the link between
movements in capital goods prices and the outlook for investment
growth? Why have bond yields moved? Such questions are addressed
in a series of analytical notes and research papers that are circulated
to the Committee each month. Some pieces of analysis and research
are commissioned directly by the Committee; others are provided
on the initiative of Bank economists. Sometimes these pieces of
analysis may also be developed into articles in the research section
of the Bulletin.
The Bank's twelve regional Agents, who each provide a summary
of the latest economic trends as perceived by their business contacts
over the previous month, are an important additional source of
intelligence. The Bank's Agents have around 7,000 business contacts
across the whole country, whom they visit on a regular basis.
The attraction of this information is that it is timely and focused
on the Committee's needs, while official data are often published
with a considerable lag. Moreover, Committee members themselves
have substantial direct contact with business through their regular
programme of regional visits.
Finally, and in addition to the analysis and interpretation
provided by the Bank's staff, Committee members also receive a
wide range of briefing material from external sources. These include
the press, economic research institutes, financial market and
academic economists, international organisations, employer and
trade union groups, and public sector bodies.
The centrepiece for the monthly Committee briefing is the
so-called "pre-MPC" meeting, which is typically held
on the Friday morning preceding the regular policy meeting. The
aim of the full morning meeting is to draw out all of the key
economic news over the past month and put it into context.
All Committee members attend, which ensures that all are briefed
to a high level and enter the policy meeting on an equal footing.
The meeting format provides an opportunity for Committee members
to ask questions and to probe further on the analysis of recent
The pre-MPC meeting takes the form of a series of set-piece
presentations by senior Bank staff. Each presentation covers a
different aspect of the economic landscape, building up a comprehensive
picture of the key economic and financial developments over the
previous month. There is a considerable emphasis on graphical
interpretation throughout the presentations to emphasise key points.
The broad parameters of each presentation are set by the objective
of providing a thorough assessment of the latest economic news.
But the nature and form of each presentation varies considerably
from month to month as speakers tailor their material to draw
out the salient features. Copies of the presentations are subsequently
circulated to each Committee member to provide the opportunity
for additional scrutiny prior to the policy meeting itself. To
assist Committee members in monitoring trends in particular data
series, each member receives an accompanying standardised briefing
pack of around 500 charts and tables in advance of the pre-MPC
The agenda for a typical pre-MPC meeting is shown in Table
B, together with a brief summary of the main areas covered. Presentations
vary somewhat in length according to current importance of the
topic, and there is flexibility to rearrange the timetable to
include short special presentations on particularly topical issues.
For example, there is typically a presentation on fiscal trends
in the meeting following the Budget and the Pre-Budget Report.
Moreover, once a quarter there is a short session synthesising
the main news from the latest external forecasts of the UK economy.
AGENDA FOR A TYPICAL PRE-MPC MEETING
|International environment||World output and trade, global oil and commodity price trends; economic and financial market developments in the United States, the euro area and Japan; monetary and interest rate developments overseas; emerging markets.
|Monetary and financial conditions
||UK money and credit aggregates and sectoral financing trends; retail and mortgage interest rates; interest rate expectations; equity prices; corporate bond spreads; exchange rates.
|Demand and output||UK GDP; demand components (consumption, investment, public spending, inventories, trade); housing market; sectoral output trends; profits and labour income; business and household surveys.
|Agents' special topic||Response to a short survey commissioned by the MPC at the previous policy meeting on a topic of particular interest.
|Labour market||Employment, hours worked, unemployment and inactivity; vacancies; skill shortages; earnings and settlements; productivity and unit labour costs.
|Prices||UK energy, petrol, and other commodity prices; producer prices (manufacturing and services); retail prices (recent trends and near-term outlook); price deflators.
|Agents' overview||Business contacts' perspective on latest economic trends, drawing on some 600-700 discussions with contacts over the previous month. Key regional and sectoral differences are highlighted.
|Financial market intelligence
||Market participants' views on recent and prospective movements in exchange rates and interest rates.
The Agents' special topic is a key part of the pre-MPC meetings.
At the end of the policy meeting each month, the Committee identifies
an issue on which a sample of the Bank's regional Agents' business
contacts can provide up-to-date insights and information that
cannot be readily obtained from an alternative source. Examples
of recent special topics include: the economic impact of the terrorist
attacks in the United States; service sector prospects; export
trends; and stock levels. In each case, 150-200 firms selected
by the Agents provide responses to a short, focused, questionnaire,
with the replies collated for the following pre-MPC meeting.
Prior to the policy meeting, the Committee receives written
answers to questions raised at pre-MPC that could not be resolved
in the meeting, as well as any new economic data or business or
The timetable for the regular MPC meetings is announced well
in advance to provide certainty to markets on the timing of potential
interest rate changes.
Monthly meetings are prescribed in the Bank of England Act: the
Committee generally meets on the Wednesday and Thursday following
the first Monday of the month.
Meetings typically start at 3 pm on the Wednesday, concluding
with a published policy announcement at noon on Thursday.
The first afternoon is devoted to a thorough review of the
major economic news over the previous month and of the implications
for the outlook. Following a short summary of key developments
since pre-MPC by the Bank's Chief Economist, the discussion is
commonly organised around selected issues under each of the major
headings covered by the pre-MPC presentations. So a typical afternoon
might begin with developments in the world economy, followed by
issues arising from, in turn: monetary and financial data; UK
demand and output trends; labour market developments; and cost
and price pressures. To conclude the discussion, the Committee
also examines whether there are any tactical issues that are relevant
to the immediate policy decision.
The discussion on each broad area is led by the Deputy Governor
responsible for monetary policy, but is free-flowing in format.
Committee members participate actively, debating and weighing
the economic news and analytical evidence.
The Treasury sends a representative to the policy meeting,
to date either the Head of the Macroeconomic Policy and Prospects
Directorate or the Permanent Secretary to the Treasury. This representative
does not participate in the general discussion, but does from
time to time brief the Committee on fiscal trends and on particular
public policy issues, such as the impact of the foot-and-mouth
epidemic or public sector pay developments, in order to facilitate
effective policy co-ordination. There are also five Bank staff
members present: a three-person Secretariat, which has the responsibility
for taking the minutes of the meeting, and the Deputy Directors
responsible for Monetary Analysis and Statistics and for Market
Operations respectively. They do not take any part in the discussion,
apart from providing occasional factual clarification, if requested
by a Committee member.
Committee members reflect on the discussion overnight. On
the Thursday morning, the Governor summarises the key points and
invites Committee members to comment on or amend this résumé.
The Governor then invites each member in turn to give their assessment
of recent economic developments, and their view on the appropriate
stance of monetary policy. The Deputy Governor responsible for
monetary policy usually speaks first, while the Governor usually
concludes. Other Committee members are called in random order.
Each member generally takes around ten minutes to present
his or her assessment. At the end of each assessment there is
an opportunity for other Committee members to ask questions. Usually,
members conclude by giving an indication of their preference for
the decision on the level of interest rates, but sometimes individuals
reserve their position until they have heard the arguments put
forward by all Committee members. At the end of the discussion,
members initially reserving their position signal their recommendation.
Once all Committee members have given their views, the Governor
puts a motion that he expects will command a majority and calls
for a vote. Members in a minority are then asked to confirm their
preferred level of interest rates.
Finally, the Committee drafts the press statement to be published
at 12 noon. On some occasions, typically when interest rates are
changed or when the policy decision clearly differs from expectations
held by financial market participants, the Committee issues a
statement explaining the main reasons behind its action. On others,
for example when the Committee has voted to maintain the previous
level of interest rates and such a decision is widely expected,
the press statement simply reports the interest rate decision.
The Minutes are published at 9.30 am on the Wednesday two
weeks after the start of the policy meeting. A first draft is
circulated by the Secretariat early in the week following the
policy meeting. After a round of written comments, the Minutes
are agreed by the Committee at a meeting on the Monday prior to
Comments in the Minutes are deliberately unattributed. The
main reason for this is to promote a vigorous discussion and debate
of the key economic issues at the meeting, encouraging members
to promote, test, challenge, and reject arguments. If all comments
were attributed in the Minutes, there is a risk that this would
encourage members to prepare set-piece statements in advance of
the meeting, and that there would be less interaction and intellectual
engagement in the discussion.
Given that monetary policy decisions depend crucially on
a forward-looking view of inflation prospects, the MPC undertakes
an inflation-forecasting exercise on a regular quarterly basis
with the assistance of Bank staff. To aid it in this task, the
Committee employs a "suite" of quantitative models of
the UK economy. A
central tool in the production of these forecasts is a relatively
standard macroeconometric model (MM). Two general types of model
supplement the MM. First, there are quantitative theoretical models
designed to illuminate particular issues that are not captured
in the MM. Examples include the consequences of technical progress
concentrated in a particular sub-sector of the economy, and the
role the banking sector may play in amplifying shocks at particular
points in the economic cycle.
Second, there are purely data-based models which are used to provide
alternative forecasts as a cross-check on the projections produced
with the MM. The projections are also systematically compared
with those produced by independent forecasters.
The suite of econometric models is an essential tool, but
the quarterly projections are not simply the result of running
either the MM, or the suite, mechanically. All economic models
are highly imperfect reflections of the complex reality that is
the UK economy and at best they represent an aid to thinking about
the forces affecting economic activity and inflation. The MPC
is acutely aware of these limitations. Moreover, a considerable
amount of judgment is required to generate the projections. In
making those judgments, the MPC draws on a range of additional
sources of information about economic developments. The published
projections thus represent the Committee's best collective judgment
about economic prospects in the light of all the information available
to it, not the mechanical output of a particular econometric model.
The Committee thus draws on a whole range of information
in preparing its projections, just as it does during the regular
monthly MPC round. However, the quarterly forecast round provides
the opportunity for more in-depth discussion of key issues in
an explicitly quantitative framework. This provides an opportunity
to stand back and look afresh at economic news over a run of months
and review whether the level of interest rates remains appropriate.
So the forecast process can result in the Committee modifying
its view of economic prospects, and thus of the appropriate setting
of interest rates, even though there may have been little news
about the economy since the previous monthly policy meeting.
An example of such a re-evaluation occurred during the August
2001 round. Although the news between the July and August MPC
meetings did not obviously point to a change in policy, taking
fresh stock of the domestic, and particularly global, economic
trends over the year thus far led the Committee towards a slightly
more pessimistic view of economic prospects. As a result the Committee
opted to cut the official interest rate by a further 25 basis
points at the August policy meeting. The fact that the quarterly
forecast round may lead to such a re-evaluation means that the
probability of the level of official interest rates being changed
is slightly higher during Inflation Report months. Since
the Bank was given operational independence in June 1997, there
have been 18 MPC meetings associated with a quarterly forecast
round and rates were changed at 10 of those meetings (56 per cent).
By contrast there were 37 MPC meetings outside a quarterly forecast
round and rates were changed just 13 times (35 per cent).
The structure of a typical forecast round is shown in Table
C. It would usually
start as early as eight weeks before the date of the associated
Inflation Report with the model review meeting. At this
meeting between the Committee and the staff, the latter report
back on any research work commissioned by the Committee at the
conclusion of the previous forecast round. The Committee then
agrees how the outcome of this research is to be taken on board
in the economic models to be used in preparing the subsequent
projections, as well as on any other factors that need to be resolved
before the staff can begin preparing the projections.
TIMETABLE FOR A TYPICAL QUARTERLY FORECAST ROUND
| ||Date relative to MPC meeting
|Model review meeting||Seven weeks before
||Staff report on research commissioned at conclusion of previous forecast round. Committee agrees on how the results are to be taken on board during the forecast round.
|Benchmark forecast meeting||Three weeks before
||Staff provide updated projections incorporating latest data and identify key issues for subsequent discussion by the Committee.
|Three key issues meetings
||Two to three weeks before
||Discussion of major issues requiring the Committee's judgment. Staff provide detailed background notes on each issue.
|Two draft forecast meetings
||One week before||Staff provide revised projections incorporating judgments made at the Key issues meeting. Committee takes a "top down" view of the plausibility of the projections and the attendant risks.
|Inflation Report published
||One week after||Contains final projections, incorporating any policy changes made at the most recent policy meeting.
During the following four weeks, the members of the Bank's
Conjunctural Analysis and Projections Division, in conjunction
with other members of the staff of Monetary Analysis and other
parts of the Bank, prepare a so-called "benchmark forecast"
with the aid of the MM. This benchmark forecast is an update of
the projections from the previous round incorporating the latest
data and any model changes and associated adjustments already
agreed by the Committee. At the same time, staff in the International
Economic Assessment Division prepare an updated forecast for the
world economy, which is an essential input into the forecast for
the domestic economy. The international forecast is prepared primarily
with the aid of the National Institute of Economic and Social
Research's global economic model (NiGEM), but also draws on other
tools such as the IMF's MULTIMOD, as well as internal research.
While these benchmark forecasts are being prepared, Bank
staff prepare a number of background papers analysing key issues
on which they think the Committee will need to form a judgment
in making its agreed projections. Recent examples of such key
issues include: the possible impact on the economy of the terrorist
attacks in the United States; the durability of the consumer boom;
and past and future supply-side developments. The papers discuss
the various possible views that the Committee might take, and
bring together evidence that might help the Committee to form
its judgment about the issue in question. Sometimes these background
papers will draw on one or more of the other models in the suite.
About four weeks before the publication of the Inflation
Report, and therefore three weeks before the associated MPC
policy meeting, the staff present the benchmark forecasts for
both the world and UK economies to the Committee. The staff also
provide an analysis of the factors behind any change from the
projections contained in the previous Inflation Report.
On the basis of the material provided by the staff, the Committee
agrees the key issues it wishes to discuss in more detail. These
may be those key issues already identified by the staff, but may
also include others identified by individual MPC members.
The Committee focuses its discussions on issues that satisfy
two conditions. First, it must be one about which there might
reasonably be a variety of views on the Committee. If an issue
is a straightforward one about which there is likely to be little
debate, then the Committee will not spend much time discussing
it. Second, it must be an issue that is quantitatively important
for the projections. The restriction to issues that are quantitatively
significant helps to focus the Committee's discussion and was
recommended in the report into MPC procedures carried out by Don
Kohn of the US Federal Reserve.
Prior to that report, the Committee spent time discussing more
peripheral issues, decisions on which are now delegated to the
staff. A by-product of this change in procedure is that the projection
is not necessarily "fine-tuned" in all respects by the
The discussion of the key issues is spread across three separate
meetings with the staff over a week or so, with each meeting typically
lasting about three hours. On each issue, there may be a consensus
across the Committee members about what judgment to take, but
unresolved issues may sometimes be carried forward for further
assessment. The risks around each individual judgment are also
discussed, though sometimes the interconnection of judgments on
different, but related, issues leads to the discussion of risks
being postponed until later in the forecast round.
By the of this sequence of key issues meetings, the Committee
needs to have taken a collective view on each of the major judgments.
In every case the Committee, under the guidance of the Governor,
tries to reach a view that represents a position that most, if
not all, of the Committee can subscribe to. But in the event of
a significant disagreement on a particular issue, a vote may be
taken with the majority viewpoint subsequently being embodied
in the projections.
The staff then produce revised projections embodying the
Committee's judgment on the key issues, as well as updating them
for any new data that have been published since the benchmark
forecast was prepared. The new projections, referred to as the
draft forecast, are then presented to the Committee a few days
before the associated MPC policy meeting. Up to this point, the
forecasts have been built up on an issue-by-issue basis, that
is to say primarily from the "bottom up". When the staff
present the new draft forecast, they also provide systematic comparisons
with forecasts produced using other models in the Bank's suite
and with the forecasts of outside bodies. These comparisons help
the Committee to take a "top-down" perspective, and
assess whether the overall shape of the forecast and the attendant
risks is plausible. Sometimes, as a result of this process, the
Committee asks for further adjustments to the projections, and
the timetable makes provision for a further meeting if necessary.
At the final stage the Committee again tries to reach a broadly
common position on the overall shape of the forecast, but if this
is not possible then the majority judgment again prevails. The
outcome of this process constitutes the "best collective
judgment" of the Committee. Of course, sometimes individual
members may feel that the Committee's collective view is sufficiently
far from their own to wish to note that explicitly when the projections
are published. Table 6.B in Section 6 of the Inflation Report
provides illustrative calibrations of the possible impact
of taking alternative judgments on certain key assumptions that
might be preferred by minority Committee members. And the range
of differences among the Committee on the central projections
for growth and inflation, and for the balance of risks, is summarised
in Section 6 and the Overview.
For the associated MPC policy meeting, the staff provide
near-final projections, based on the prevailing level of official
interest rates. They also typically provide alternative projections
based on other possible settings for official rates to help the
Committee in its deliberations. It is important to emphasise,
however, that there is no mechanical link between the central
projection for inflation at the two-year horizon and monetary
policy. The box on page 67 of the November 2000 Inflation Report
explains why this is so. The discussion at the policy meeting
may lead the Committee to wish to modify its projections further,
and if so the timetable offers scope for some last-minute amendments
before the Inflation Report goes to press.
The Bank is required by the 1998 Bank of England Act to publish
a quarterly report on inflation prospects. The Inflation Report
provides description and analysis of the current state of
the economy, as well as describing the Committee's assessment
of economic prospects as embodied in the projections. Together
with the Minutes of the monthly policy meeting, the Inflation
Report provides a vehicle for explaining the Committee's thinking
and thus enhances the transparency of the monetary policy process.
The timetable for preparing the Inflation Report runs
parallel to the quarterly forecast round described above with
the drafting carried out by a small dedicated team. The typical
Inflation Report starts with a short Overview, which is
followed by four sections on: money and asset prices; demand and
output; the labour market; and costs and prices. The focus of
these sections is on reporting and interpreting recent and current
developments. A fifth section briefly summarises monetary policy
decisions during the past quarter, drawing on the already published
Minutes. The final section describes the Committee's assessment
of the economic outlook and the projections for growth and inflation.
Publication of the Inflation Report takes place one
week after the corresponding policy meeting. While the Act requires
only that it be published "with the approval" of the
Committee, in practice the texts of the Overview and Section 6
are agreed formally by the Committee at a special meeting, just
as with the Minutes of the regular monthly policy meetings. Invariably
there is also an associated press conference led by the Deputy
Governor responsible for Monetary Policy, accompanied by the Chief
Economist and the Director for Financial Market Operations. The
full text of the Report is available on the Bank's web
site at www.bankofengland.co.uk/inflationrep/index.html
This article has described the current processes underlying
the monthly MPC meetings and the quarterly forecast round leading
up to the publication of the Inflation Report. These processes
have evolved considerably since the MPC was created and the Bank
first started publishing an Inflation Report in 1993, and more
particularly since the Bank was given operational independence
over monetary policy in 1997. The processes will no doubt continue
to evolve in the future as the Bank strives to find better ways
of operating. However, we hope that this snapshot of present procedures
provides a flavour of how the Bank and the MPC go about formulating
Bank of England Quarterly Bulletin! Winter 2001. Back
There is a quorum of six of whom two must hold office as Governor
or Deputy Governor of the Bank. The chair shall be taken by the
Governor, or in his absence by the Deputy Governor with executive
responsibility for monetary policy. The Chairman has a casting
vote in the event of a tie. Back
See "The transmission mechanism of monetary policy",
Bank of England Quarterly Bulletin, May 1999. Back
Additional meetings are permitted under the 1998 Bank of England
Act. The Governor convened a special meeting on 18 September 2001-the
first occasion that this facility has been used. Back
The briefing meeting used to take the best part of a full working
day in the early years of the Committee. Following internal discussion
and the external review of MPC procedures by Don Kohn of the Federal
Reserve (see "The Kohn Report on MPC procedures; Quarterly
Bulletin, Spring 2001), the Committee agreed to concentrate
the meeting into a half-day. Back
The chartpack is updated before the policy meeting, with new
data and survey information highlighted. Back
Treasury staff provide briefing on the Budget and the pre-Budget
Report in a separate meeting. The Committee has also received
briefing from the Low Pay Commission on the introduction and subsequent
uprating of the National Minimum Wage. Back
There is generally limited UK economic data, as the pre-MPC and
MPC meetings are deliberately scheduled in a relatively fallow
period in the monthly and quarterly data rounds. However, additional
information on business trends and on house price developments
is typically published in this gap as well as data on the major
overseas economies. Back
Typically meetings are announced in the early autumn for the
subsequent calendar year. Back
During 2001, two of the scheduled meetings were held instead
on Tuesday and Wednesday in order to allow the Governor to attend
the General Council of the European Central Bank. Back
See Economic models at the Bank of England (1999), and
Economic models at the Bank of England: September 2000 update. Back
See Hall, S, "Credit channel effects in the monetary
transmission mechanism" on pages 442-48. Back
The forecast process has been modified over the past year in
the light of internal discussion and the external review of MPC
procedures by Don Kohn of the Federal Reserve (see "The Kohn
Report on MPC Procedures", op cit). Back
See "The Kohn Report on MPC Procedures", op