The Bank of England promised a new era of transparency at Threadneedle Street yesterday by pledging to release full transcripts of the crucial meetings where interest rate decisions are taken.
The Bank also asked the Government to change the law to reduce the number of meetings of its rate-setting Monetary Policy Committee (MPC) from 12 a year to eight.
The transcripts of the MPC’s meetings will be published after an eight-year lag, meaning the first batch will see the light of day in March 2023. At the moment, an audio recording is made of meetings but it is destroyed shortly after. Minutes summing up the debate between members, are published two weeks after the decision is taken.
The Bank’s reforms follow the recommendations of the former US Federal Reserve Governor, Kevin Warsh, who was asked by the Bank’s Governor, Mark Carney, to review the transparency practices.
The Bank also said that from next August its general minutes will be published on the same day as the decision on rates is revealed to provide clearer information on why decisions have been reached. The Bank’s quarterly Inflation Reports, which contain growth and price forecasts, will also be made public on the same day.
“The combination will mark a step change in how this institution is run,” said Mr Carney, unveiling the reforms. “They will make us more accountable to the British people.”
At a press conference, Mr Carney added that the decision to publish transcripts of MPC meetings would help historians evaluate the performance of members. “This is about individual reputations,” he said.
The reduction of the number of MPC meetings to eight would bring the UK into line with the European Central Bank, the Federal Reserve and also Mr Carney’s native Canada. Mr Carney made it clear that he had long been in favour of this reform. “I think we meet too often is the honest answer,” he said.
The Chancellor, George Osborne, welcomed the Warsh report and said he would consider amending the Bank of England Act in the next Parliament to cut the number of MPC annual meetings to eight.
However, despite the “transparency” rhetoric, the report only recommended that the transcript of the second day of MPC meetings be made public. It said that the free-ranging first day of discussions should no longer be recorded or transcribed.