Governor Carney overhauls rate-setting process

Bank of England Governor Mark Carney today. Photo credit: Alastair Grant/PA Wire
Bank of England Governor Mark Carney today. Photo credit: Alastair Grant/PA Wire
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The Bank of England will provide instant information about its interest rate discussions and plans to hold fewer policy meetings under the latest set of changes put forward by Governor Mark Carney.

In an overhaul of the way the Bank reveals its thinking on monetary policy, the BoE said it would publish minutes of its debates alongside its decisions, rather than wait nearly two weeks as it does now. The change would come into effect in August 2015.

“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,” said Mr Carney.

The Bank’s quarterly Inflation Report, which spells out its latest thinking on the economy and its forecasts, will also be published at the same time as policy decisions, avoiding the potential for mixed signals.

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.

The Bank also said it wanted to hold only eight monetary policy meetings a year starting in 2016, down from 12 now, in line with the Federal Reserve’s schedule. The European Central Bank will move to a meeting every six weeks in 2015.

Chancellor George Osborne welcomed the reforms and said he would seek to pass legislation needed to change the schedule after May’s election.