Uncertainty and Voting on the Bank of England’s Monetary Policy Committee

29 Pages Posted: 23 Dec 2020

See all articles by Alastair Firrell

Alastair Firrell

Bank of England

Kate Reinold

Bank of England - Monetary Analysis

Date Written: December 18, 2020


Differences of opinion are a natural and vital part of monetary policy making by committee. With the appropriate stance for monetary policy both unobservable and uncertain, individual policymakers need to synthesise a wide range of information, including the views of other committee members. Using a novel measure of views that we construct from text analysis of the Bank of England Monetary Policy Committee’s minutes and speeches, we show that both individual economic assessments and broader committee views are important in explaining individual voting. But in periods of high uncertainty both become more volatile and carry less weight in votes, consistent with the predictions of a simple voting model embedding a signal extraction problem. There is no increase in the dispersion of economic assessments in periods of uncertainty, nor in the mean dissent rate. Thus we show that interpreting the voting record as a reflection of policy uncertainty is unreliable, and highlight the value of individual committee members’ communications — such as speeches — for conveying differences in view.

Keywords: Central bank communication, committees, monetary policy, uncertainty

JEL Classification: D71, D81, E52, E58

Suggested Citation

Firrell, Alastair and Reinold, Kate, Uncertainty and Voting on the Bank of England’s Monetary Policy Committee (December 18, 2020). Bank of England Working Paper No. 898, Available at SSRN: https://ssrn.com/abstract=3753711 or http://dx.doi.org/10.2139/ssrn.3753711

Alastair Firrell (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Kate Reinold

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics