Shadow Monetary Policy Committee

The Shadow Monetary Policy Committee (SMPC) is a group of independent economists, which has met once a quarter since July 1997 at the Institute for Economic Affairs (IEA) to monitor the Monetary Policy Committee’s Bank Rate decisions, and to make rate recommendations of its own.

July 2017

Shadow Monetary Policy Committee votes eight / one to raise Bank Rate in August.

At a quarterly face-to-face meeting in July, the Shadow Monetary Policy Committee (SMPC) voted by eight votes to one to raise Bank rate. Three members voted to raise Base rate by 50bps. Five voted to raise by ¼% and one voted to hold.


April 2017

Shadow Monetary Policy Committee votes seven/two to rise Bank Rate in May

At its April 2017 face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) voted by seven to two, to raise Bank rate in May. Three members voted to raise Base rate by 50bps. Four voted to raise by ¼%.
 

March 2017

Shadow Monetary Policy Committee votes seven/two to rise Bank Rate in March

In its March 2017 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of Seven to Two, to raise rates in March. Three members voted for an immediate rise of 0.5%. Fourther favoured a 0.25% rise.

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January 2017

Shadow Monetary Policy Committee votes six/three to raise Bank Rate in February

At its most recent face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of six to three, to raise the rate by 25 bps in February. Two members voted to raise Base rate by 50bps. There was unanimous bias to raise rates in the near future.  

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December 2016

Shadow Monetary Policy Committee votes Six/Three to Raise Bank Rate in December

In its December 2016 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of Six to Three, to raise rates in December. One member voted for an increase of 0.75%. All other members favouring a rise voted for an increase of 0.25%.  


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November 2016 

Shadow Monetary Policy Committee votes five/four to raise Bank Rate in November.

At its October 2016 face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of five to four, to raise rates in November. Of the five members favouring a raise, three preferred a rise of 0.25% and two a rise of 0.5% Of the four members voting to hold, three had a bias to raise r ates soon.

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September 2016

Shadow Monetary Policy Committee votes Seven/Two to Hold Bank Rate in September.

In its September 2016 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of Eight to One, to hold rates in September. The dissenting votes were for immediate rises in rates — in one case to 1% and in the other to 0.75%.

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August 2016

At its most recent face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of nine to zero, to hold rates in August.

Members were agreed that in the light of the uncertainty created by the Brexit vote, monetary policy should not be changed in either direction until a clearer picture emerges of the implications for GDP growth and for inflation. A number of members believed that a short-term post-Brexit-vote downturn was plausible, perhaps on top of a slowdown that would have occurred anyway because of global economic factors, but that a better policy response to such a downturn would be additional quantitative easing rather than interest rate cuts.

Global credit expansion consistent with moderate growth of world nominal demand

Peter Warburton started his presentation by assessing the state of the world economy and prospective near-term growth. Particular weight was given to recent developments in global money and credit data. He noted that his (GDP-weighted) global credit aggregate continued to imply moderate expansion, with credit growth stable in its recent 5-6% range. While this is below pre-crisis norms, it was viewed as broadly consistent with a reasonable expansion in global nominal demand. The shortfall relative to pre-GFC growth rates was primarily driven by weaker growth in financial corporations’ debt; credit provided to the non-financial private sector was expanding at a rate much closer to what was considered healthy before 2007.

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