The Bank of England will start publishing minutes of its policy meetings alongside the decision as part of a series of measures designed to increase transparency and reduce the impact of uninformed speculation on markets.
It is also seeking to cut the number of monetary policy committee (MPC) meetings to eight a year, down from once a month. That would bring it into line with the US Federal Reserve and mean that every other meeting could coincide with its own quarterly inflation report, a document which analysts currently scrutinise for clues as to the outcome of the next MPC meeting.
Governor Mark Carney said: “By removing the present drip-feed of news in favour of a single monetary policy announcement, we believe these arrangements will enhance the effectiveness of our monetary policy communications, making the policy signals we send as clear as possible.”
Since he arrived in mid-2013, Canadian Carney has been at pains to give a clearer steer on how long it is likely to keep rates at their record low, but his introduction of formal forward guidance has simply given analysts another piece of the jigsaw to speculate over.
Starting from next August, the MPC’s meetings will take place over three days followed by the announcements on Thursday, to provide the time for the minutes to be drawn up. Cutting the number of meetings will require legislation which is not expected to take effect before 2016.
Howard Archer, chief UK economist at IHS Global Insight, said that any move that clarified policymakers’ decisions and reduced the risk of damaging speculation based on incomplete knowledge would be a good thing.
He said: “This should help to limit the risk of potentially damaging market swings that can occur when a policy decision is taken but the full (if any) reasons are not known for two weeks after.
“It should also reduce the risk of misinterpretations of the Bank of England’s policy decisions by analysts, the markets and corporate decision makers.”
Some investors were wrong-footed last month when minutes of the Bank’s November meeting showed more differences among policy makers over keeping interest rates unchanged than had been apparent from the inflation report published a week earlier. In a further change announced yesterday, the bank said it would start publishing transcripts of its policy discussions with an eight-year lag, effective from March.
However, in a nod to concerns that such a change could curb frank discussion, deliberations on the first day of meetings will not be reported.
The changes follow a review by former Fed governor Kevin Warsh, who said discussions among its policymakers were “second to none” and more robust than at the Fed where discussions were “rather set-piece”.
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