Interest Rate Changes - Too Many or Too Few?

Abstract

In this speech, Kate Barker, member of the Bank's Monetary Policy Committee, discusses some issues around the timing of Bank Rate changes; in particular how different types of uncertainty would suggest more, or less, aggressive policy responses to news. She goes on to consider how the MPC has acted over the past ten years, and concludes that overall there is little evidence that the MPC has behaved in a gradualist manner. Looking at individual voting patterns, she observes that on average external MPC members have been a little more active in voting for Bank Rate changes than internal members. Finally, commenting on the present economic situation, she discusses the considerable uncertainties around the outlook for inflation as the effects of the energy cost shock feed through. She suggests that while this type of uncertainty prevails, Bank Rate changes could become a little more frequent.