MPC 'outsiders' win research rights at the Bank of England

Click to follow
The Independent Online

EXTERNAL MEMBERS of the Monetary Policy Committee are to be given additional resources for research in the wake of the recent row at the Bank of England.

EXTERNAL MEMBERS of the Monetary Policy Committee are to be given additional resources for research in the wake of the recent row at the Bank of England.

Five members of the MPC are due to give evidence to MPs on the Treasury Committee tomorrow, and will be quizzed about the request from the four outside members for the capacity to conduct their own research.

The Bank's Court has been anxious to settle the long-running dispute since it became public recently. The MPC's demands for economic research have increasingly outstripped the Bank's capacity to provide it since being granted independence to set monetary policy in May, 1997.

Mervyn King, the deputy governor, admitted recently that the publicity about the wrangle had been damaging. He said the MPC had collectively been forced to decide what areas of research should get priority, which meant some members' projects had been squeezed out. "There has to be provision of support for personal research," he said, adding that there would shortly be an agreement.

The Treasury has been at pains to stay out of what it regards as an internal matter for the Bank. Other observers are critical of the length of time it has taken for the Governor and Court to address the problem.

The Court has the legal obligation to scrutinise the work of the MPC, including its budget, to determine whether it has collected the "regional, structural and other information necessary for the purposes of formulating monetary policy."

External MPC members Sushil Wadhwani and Charles Goodhart are due before the Treasury Committee today alongside the Governor, Eddie George, Mr King and John Vickers, the Bank's chief economist.

The MPs will also question them about the inflation outlook. Mr Wadhwani ruffled the financial markets on Friday by indicating his concern about pressures in significant sectors of the economy. He had been regarded as one of the most dovish members of the MPC, so his speech renewed concerns about another interest rate rise.

Comments