Carney to overhaul vital MPC meetings

THE Bank of England is planning to reduce the number of times it meets to set interest rates, as part of a sweeping overhaul of its operations, writesHugoDuncan.

The central bank’s nine-strong Monetary Policy Committee (MPC) votes on official borrowing costs once a month but may only meet eight times a year from 2016.

The move was outlined by Governor Mark Carney yesterday and would bring the UK into line with the US Federal Reserve, the European Central Bank and the Bank of Canada.

‘I think we meet too often, that is the honest answer,’ said Carney, who was head of the Bank of Canada before he took over in London in July last year.

Cutting the number of MPC meetings requires a law change.

Chancellor George Osborne welcomed the proposals as ‘an important improvement to the policy-making process’ and said he would seek to pass the necessary legislation after the General Election in May.

Carney also outlined plans to publish the minutes of each MPC meeting alongside its decision rather than two weeks later.

The Bank’s quarterly inflation reports, which contain the latest forecasts for the UK economy, will also be published alongside the decision and the minutes. Carney said that by ‘removing the present drip-feed of news’ the signals the Bank sends on interest rates will be ‘as clear as possible’.