The Role and Operations of the Bank of England Monetary Policy Committee

Budd, Alan

doi:10.1111/1468-0297.00374

Cited by 45 publications

(8 citation statements)

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“…Second, interest rate decisions are made in real time and based on current information, while there is often considerable uncertainty about the current state of the economy; see, among others, Orphanides (1998). In this paper, we assume that the filtering that is required of current, imperfect measures of economic activity takes place as part of the internal procedures of the Bank of England (see Budd, 1998, for a description). Our empirical results indicate that forecasts of inflation and output provide the best explanation of UK monetary policy since 1997, which supports the inflation forecast targeting rule.…”

Section: Introductionmentioning

confidence: 99%

Rational Partisan Theory, Uncertainty, and Spatial Voting: Evidence for the Bank of England's MPC

Bhattacharjee¹,

Holly²

2010

Economics & Politics

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The transparency and openness of the monetary policy-making process at the Bank of England has provided very detailed information on both the decisions of individual members of the Monetary Policy Committee (MPC) and the information on which they are based. In this paper, we consider this decision-making process in the context of a model in which inflation forecast targeting is used, but there is heterogeneity among the members of the committee. We find that rational partisan theory can explain spatial voting behavior under forecast uncertainty about the output gap. Internally generated forecasts of output and market-generated expectations of medium-term inflation provide the best description of discrete changes in interest rates, in combination with uncertainty in the macroeconomic environment. There is also a role for developments in asset, housing and labor markets. Further, spatial voting patterns clearly differentiate between internally and externally apzpointed members of the MPC. The results have important implications for committee design and the conduct of monetary policy. Copyright 2009 Blackwell Publishing Ltd.

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Section: Introductionmentioning

confidence: 99%

Rational Partisan Theory, Uncertainty, and Spatial Voting: Evidence for the Bank of England's MPC

Bhattacharjee¹,

Holly²

2010

Economics & Politics

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“…Summaries of the processes by which monetary policy is conducted are readily accessible in Budd (1998) and in retrospect, King (1997King ( , 2002, therefore this section provides only a brief overview. The responsibility for setting interest rates is currently held by the Monetary Policy Committee (MPC) of the Bank of England.…”

Section: Monetary Policymaking In the Ukmentioning

confidence: 99%

“…In addition, the MPC is provided with a range of the Bank's monetary, economic, statistical and market expertise, supplemented by intelligence from the Bank's network of twelve regional Agencies. The presentations are given under the following headings: monetary conditions, demand and output, the labor market, prices, and financial markets (Budd, 1998). The MPC then meets in private to discuss the interest rate decision on a Wednesday afternoon and Thursday morning.…”

Section: Monetary Policymaking In the Ukmentioning

confidence: 99%

“…We refer readers that are interested in the optimal construction and use of large data sets in that direction. 6 The M4 is the broad definition of the money stock, which comprises holdings by the M4 private sector (i.e. private sector other than monetary financial institutions) of notes and coin, together with their sterling deposits at monetary financial institutions in the UK (including certificates of deposit and other paper issued by monetary financial institutions of not more than 5 years original maturity).…”

Section: In-sample Predictionsmentioning

confidence: 99%

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Forecasting changes in UK interest rates

Kim

Mizen

Chevapatrakul

2008

Journal of Forecasting

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Making accurate forecasts of the future direction of interest rates is a vital element when making economic decisions. The focus on central banks as they make decisions about the future direction of interest rates requires the forecaster to assess the likely outcome of committee decisions based on new information since the previous meeting. We characterize this process as a dynamic ordered probit process that uses information to decide between three possible outcomes for interest rates: an increase, decrease or no change. When we analyse the predictive ability of two information sets, we find that the approach has predictive ability both in-sample and out-of-sample that helps forecast the direction of future rates. Copyright © 2008 John wiley & Sons, Ltd.

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“…The Monetary Policy Committee (MPC) of the Bank of England was set up on 6 th May 1997 and entrusted with setting UK interest rates (Budd, 1998). The MPC meets monthly, and at 12 noon on the scheduled day (usually the Thursday following the first Monday in each calendar month), announces the level at which they have set interest rates until their next meeting.…”

Section: Scheduled Announcements and Volatility Patterns: The Effectsmentioning

confidence: 99%

Scheduled announcements and volatility patterns: The effects of monetary policy committee announcements on LIBOR and short sterling futures and options

Sun

Sutcliffe

2003

Journal of Futures Markets

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Both the UK spot and futures markets in short‐term interest rates are found to react strongly to surprises in the scheduled announcements of the repo rate and RPI. Therefore, these announcements should also affect the market for options on short‐term interest rate futures. Because the repo rate and RPI announcements are scheduled, the options market can predict the days on which announcement shocks may hit, and build this information into its volatility expectations. It is argued that the volatility used in pricing options should alter over time in a predictable nonlinear manner that varies with contract maturity and the number of forthcoming announcements; but is independent of announcement content. The empirical results support this hypothesis. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:773–797, 2003

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The Role and Operations of the Bank of England Monetary Policy Committee

Cited by 45 publications

References 1 publication

Rational Partisan Theory, Uncertainty, and Spatial Voting: Evidence for the Bank of England's MPC

Rational Partisan Theory, Uncertainty, and Spatial Voting: Evidence for the Bank of England's MPC

Forecasting changes in UK interest rates

Scheduled announcements and volatility patterns: The effects of monetary policy committee announcements on LIBOR and short sterling futures and options

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