Outlook: Grown-ups are in charge at the MPC

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The Independent Online
It would not have been a surprise if the members had been split over the interest rate decision made by the Monetary Policy Committee last month. Economists outside the Bank of England were in disagreement about the need for an increase in rates. As Winston Churchill famously observed, you always get more than one opinion per capita from members of the economics profession. At a time like this when the economy is at a turning point, the range of views is wider than ever.

However, it looks like the instant rumours of a split vote in the Bank were nothing more than a cover story put around by those unfortunates in the City who had bet on no increase. The quarter point move certainly caught many by surprise.

The minutes suggest that there were indeed some nuances of disagreement between the MPC's members. It was the first time that a range of possible economic scenarios requiring different policy reactions - doveish, wait- and-see or hawkish - had been discussed so explicitly. This means, more likely than not, that the members did not fully agree on which was the most plausible. As the minutes note, there is a lot of uncertainty about where growth and inflation are heading.

How comforting. If the seven experts holding the monetary reins could hold different views and still end up with a consensus decision, it means we have grown-ups in charge of monetary policy. Perhaps the quarter point was a compromise between hawks who would have opted for a half point and doves who wanted no change. They debated it and reached a conclusion they could all sign up to.

This is not the stuff of dramatic headlines or even successful gambles in the sterling futures market. A split in the august corridors of the Bank of England would have been more exciting. But it does hold out the hope that the new structure for setting interest rates will indeed deliver the most responsible policy decisions Britain has enjoyed for a long time. Even Sir Winston might have been grudgingly impressed.

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