Transparency and the Effectiveness of Monetary Policy following the Warsh Review at the Bank of England

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Question 1: Do you agree that the simultaneous release of the policy decision, the enhanced minutes (including the voting record) of the MPC meeting and (in the relevant months) the release of the Inflation Report will facilitate inference on the likely stance of monetary policy?
 
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Question 2: Do you agree that the Bank's proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?
 
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Summary

Following the Warsh Review, the Bank of England plans to release its policy decisions, ‘enhanced’ meeting minutes and (once a quarter) the Inflation Report all at the same time. This column, which reports the views of the leading UK-based macroeconomists, reveals substantial support for the idea of simultaneously providing the different MPC documents. In order to make this possible, the Bank plans to change the structure of its Monetary Policy Committee meetings. When the proposed change in the structure is taken into account, the panel is split on the desirability of the Bank's plans.

Introduction

Following the Warsh Review of transparency practices and procedures at the Bank of England (Warsh, 2014), the Bank plans to change the structure of its Monetary Policy Committee (MPC) meetings and release its policy decisions, ‘enhanced’ meeting minutes and (once a quarter) the Inflation Report all at the same time (Bank of England, 2014).

There have been critical reactions to the proposals (see Goodhart 2015 and especially Eichengreen and Geraats 2015). In its latest monthly survey of leading UK-based macroeconomists, the Centre for Macroeconomics has canvassed their views on the idea of simultaneously providing the different MPC documents and changing the MPC process.

Background

The Warsh Review, published in December 2014 along with a response by the Bank, describes how transparency could support four strategic policy objectives: “making sound policy decisions; communicating judgments effectively; ensuring accountability for its actions; and creating a fair and accurate historical record”.[1] 

One of the recommendations of the Warsh Review is that “[t]he Bank should make public a concise summary of its policy decision and rationale as soon as is practicable upon the meeting’s conclusion. This summary should encapsulate the MPC consensus. And the votes of individual [Monetary Policy] Committee members should be stated in the policy summary.”[2]

The Bank responded to this recommendation: “The Warsh Review recommends that the MPC publish a detailed policy statement as soon as is practicable following each policy meeting. The MPC agrees that such a step would improve the effectiveness of its communications and enhance accountability. The [Monetary Policy] Committee believes that there is scope to go further in this direction. It is therefore announcing today its intention to publish both the minutes of its policy meetings and (in the relevant months) the Inflation Report at the same time as its policy decision.”[3] To facilitate these changes, the Bank proposes to change the structure of its MPC meetings from two consecutive days to three gatherings spread out over seven days. 

The Bank has also accepted several other proposals contained in the Warsh Review. While this survey focuses only on the timing of the release of information and the change in the structure of the MPC meetings, two of the other accepted proposals have a bearing on the survey’s questions. First, the number of policy meetings will be reduced from twelve to eight.[4] Second, the published MPC minutes will be enhanced somewhat so that the discussions on the first day of MPC meetings, which are of a ‘more deliberative’ nature, are reflected more accurately. Currently, the minutes covering the first day are limited to a factual report of economic and financial developments. The Warsh Review recommends that the minutes better capture “the crux” of the deliberations and give “a greater sense of the weight attached by [Monetary Policy] Committee members to competing narratives” to describe recent economic developments.

What should accompany the policy announcement?

Under the Bank’s proposed plan, the MPC will publish a detailed policy statement and rationale on each announcement day.[5] This will be accompanied by the simultaneous release of the enhanced MPC meeting minutes and (in the relevant months) the Inflation Report, rather than being published with a two and one week lag, respectively. One possible advantage is that this simultaneous release will be helpful in understanding why certain policy decisions are taken. In the words of Governor Carney, “we believe these arrangements will enhance the effectiveness of our monetary policy communications, making the policy signals we send as clear as possible”.[6] Moreover, under the new schedule the market does not have to speculate what new information the minutes and the Inflation Report will contain. A related argument has been put forward by Charles Goodhart (2015), who argues that it may be desirable to reduce the number of monetary news events.

However, one possible concern is that the simultaneous release of so much information may be difficult to absorb and confuse market participants. If true, then this could lead to more volatile market outcomes. Also, the literature on the benefits of public information makes clear that more information is not always better.[7] However, here the question is not more versus less public information, but the pace at which the information is released to the public. Indeed, the change in the timing has been discussed in Eichengreen and Geraats (2015) and Goodhart (2015), who question whether policymaking would become more effective under this proposal.  

The first question focuses specifically on the proposed simultaneous release of information. Under the proposed plan for the release of information, the MPC will publish both the minutes of its policy meetings and (in the relevant months) the Inflation Report at the same time as its policy decision. In answering this question, we asked panel members not to take into account that the simultaneous release of information requires a change in the MPC schedule.

Q1:      Do you agree that the simultaneous release of the policy decision, the enhanced minutes (including the voting record) of the MPC meeting and (in the relevant months) the release of the Inflation Report will facilitate inference on the likely stance of monetary policy?

Summary of responses

Leaving aside respondents who neither agree nor disagree and the one respondent who did not express an opinion, 65% of the panel members agree or strongly agree that the simultaneous release of all documents related to the MPC process would facilitate inference on the likely stance of monetary policy. When the numbers are weighted with the panel members’ self-assessed confidence level, the fraction of respondents in agreement increases to 71%. Among the members that disagree, nobody strongly disagrees.

Several panel members in support of the simultaneous release argue that a delay between the announcement of the MPC decision and release of the supporting documents implies that there is a period during which it may be difficult to interpret the MPC’s decisions and markets may have to speculate about the reasoning behind its decisions.

Sir Christopher Pissarides (LSE) points out that the simultaneous release ensures that “nothing will be ‘hidden’ by the Bank for a few more days, which could lead to more speculation about its content”. Sushil Wadhwani (Wadhwani Asset Management and former MPC member) observes that “we have had several instances when the Inflation Report press conference has been misleading, because the governor presenting the Report has failed to accurately reflect the weight of opinion on the Committee. Having the minutes appearing simultaneously might well help with this problem”.

Dame Kate Barker (Credit Suisse and former MPC member) mentions that “[p]ast practice often led to the markets interpreting the Inflation Report one way and the minutes a different way. This will now be avoided.” A related argument is given by George Buckley (Deutsche Bank) who comments that “it seems anachronistic that at the Bank’s Inflation Report press conference the governor cannot currently discuss in detail the debate – and the vote – on the Committee at its policy decision a week earlier because the minutes are not published”.

Several of the panel members who do not support the simultaneous release of information are concerned about the possibility that too much information is released and that this could hinder effective understanding of MPC policies and the state of the economy. As mentioned above, the literature provides a rationale for this concern.[8]

Martin Ellison (University of Oxford) writes that “the most prominent challenge to efficiency [of the ability of markets to process information] is the ‘beauty contest’ idea”, first formulated by Keynes and updated by Morris and Shin (2002). Ellison has “reservations about whether this is really a regular issue for the Bank of England”.

By contrast, other panel members are concerned about the release of too much information. David Cobham (Heriot-Watt University) writes that “there is a real danger of a deluge of information giving the appearance of transparency but in fact just drowning the observers”. However, Richard Dennis (Glasgow) argues that “although the release of greater information may lead to an initial period of learning, market participants are likely to identify quickly the documents and sections of documents that are most relevant”.

Angus Armstrong (NIESR) argues that a drawback of the proposed plan is that “the announcement and enhanced minutes are likely to overshadow the Inflation Report possibly resulting in less analysis and discussion (and feedback to the Bank)”. Jagjit Chadha (University of Kent) emphasises that “the Inflation Report, as a full-blown forecast, can also be thought of as an exercise worthy of scrutiny, per se, and also an opportunity to consider longer-term factors in the policy decisions”.

Finally, more than a few panel members argue that the proposed change to simultaneous release is of minor importance. Andrew Mountford (Royal Holloway) mentions that “it is important that the public and the markets know the rationale and information/data behind policymakers’ decisions. This allows faulty reasoning and analysis to be challenged and corrected and should also make future decisions more easy to predict. Clearly a long delay would reduce transparency but a couple of weeks shouldn’t matter. It would still leave plenty of time before the next interest rate decision.”

Some panel members suggest specific suggestions that would be more effective in enhancing transparency. For example, Simon Wren-Lewis writes that “if the Bank seriously wants to improve its transparency, it should make and publish forecasts of what interest rates will be, as the Fed now does”.

The Bank of England’s proposed MPC process

To enable the simultaneous release of the policy decision, the minutes, and (in the relevant months) the Inflation Report, the Bank proposes to change the MPC meeting process.  Whereas the first question focuses only on the desirability of the simultaneous release of information itself, the second question focuses on the desirability of such a simultaneous release when it is accompanied by the proposed new MPC meeting schedule.

The MPC currently meets on a monthly cycle. This cycle begins with a pre-MPC meeting on a Friday, where Bank staff present to the MPC, followed by two consecutive days of closed meetings on the Wednesday and Thursday of the following week. The first day of the closed meeting is described as “more deliberative” and the second day as “more explanatory and decision-making”. The MPC’s decisions are announced at midday on the Thursday shortly after the MPC meeting has finished.

Writing enhanced minutes and getting this information into the Inflation Report is time-consuming and this means that there has to be a gap between the MPC deliberations and discussions and the announcement.  Specifically, the Bank proposes to change the schedule of the MPC process as follows. First, the deliberating part of the MPC meeting, now held on the day before the announcement, will take place seven days before the Thursday on which the policy decision and accompanying information is published. Second, the explanatory and decision-making part of the MPC meeting, currently held on the morning of the announcement, will be divided into two meetings – the main policy discussion will take place three days before the day of the announcement; the policy vote itself will take place on the evening before the announcement day. The table below provides an outline of the current and the proposed schedule.  

Under the new schedule, MPC meetings will start one full week before the policy announcement day, whereas they start the day before the announcement under the current schedule. The Bank argues that the benefit from this change is that it allows the simultaneous release of a complete set of related documents.  There may be some disadvantages as well. The change in the structure of the MPC meetings from two consecutive days to three gatherings spread out over seven days might affect the coherence of the discussion (and the minutes). Spreading the different parts of the MPC process over a longer time period may create the risk of leaks – actual or perceived – and leave room for a news shock that renders the discussions outdated. However, one could argue that this will not happen very often. Moreover, the actual decisions are made the evening before they are announced so in principle, MPC members can cast their vote depending on the most recent information.

Q2: Do you agree that the Bank’s proposal to release the policy decision, MPC minutes and (once a quarter) the Inflation Report all at the same time justifies a change in the structure of MPC meetings from two consecutive days to a process in which in the MPC meetings are spread out over seven days?

Summary of responses

There is more disagreement among panel members with respect to this second question. Again leaving aside those panel members who neither agree nor disagree and the one panel member who does not express an opinion, 56% of respondents disagree with the statement that the change in the MPC schedule is justified by possible benefits of simultaneous provision of the documents. Among the 44% of respondents in agreement, none strongly agree. Weighted with self-assessed confidence levels, the fraction opposing the proposed change decreases slightly to 53%.

The panel members acknowledge that the simultaneous release of information makes some changes in the MPC schedule unavoidable.  Quite a few of the respondents indicate that these proposed changes carry disadvantages. This is true for respondents who think the simultaneous release of information is in itself beneficial and for respondents who do not think it is.

Among the former, there are panel members for whom the disadvantages of the new schedule are of such magnitude that they no longer support the simultaneous provision of documents.  Specifically, there are five panel members who agree or strongly agree with the first statement but disagree or strongly disagree with the second. In addition, there are three panel members who agree with the first statement but neither agree nor disagree with the second statement.

Some respondents argue that the new schedule has advantages. Dame Kate Barker (Credit Suisse and former MPC member) writes that under the old schedule “there was sometimes less time than I would have liked to reflect on the Wednesday discussion before voting”. George Buckley (Deutsche Bank) suggests that “holding a ‘meeting’ over a week could help focus policymakers’ minds on the broader issues and avoid potentially rash decisions being made on the basis of how policymakers are feeling on any one day – just as holding fewer policy meetings a year should do too”.

One disadvantage mentioned by several respondents is the possibility of leaks. Sushil Wadhwani (Wadhwani Asset Management and former MPC member) writes that “the risk of leaks should not be underestimated. A pretty large number of people will know the likely decision for seven days, something which is pretty dangerous. Remember that the set of people who will know the probable decision will include the prime minister and chancellor (and their special advisers)”.

Michael McMahon (University of Warwick) reminds us that “the push for greater transparency of the Fed in 1993 followed a period of leaked interest rate decisions”.[9] But George Buckley (Deutsche Bank) expresses “doubt that the disadvantages related to concerns about leaks are warranted – after all, the Inflation Report itself takes quite some time to put together and by a far larger workforce within the Bank (than the MPC), yet that is never leaked”.

Another disadvantage put forward by the panel is the possibility that decisions do not fully incorporate new information that becomes available during the MPC process. Gianluca Benigno (LSE) writes that “spreading the MPC meeting over seven days seems to me quite a lot and it is likely to make the minutes outdated when new information comes in during that period”. In contrast, Wouter Den Haan (LSE) thinks that “the chance that something completely new and relevant happens during the week of the MPC process is simply not that big”.

Again, several panel members question whether the changes are substantial. Dame Kate Barker (Credit Suisse and former MPC member) writes “having these documents out at the same time as the vote is rather ambitious. I don’t think putting them into the following week would have mattered.” John Driffill (Birkbeck College) writes “financial markets may like these changes, believing they will make more money with the additional information. The public in general and the ‘real economy’ will notice no difference.”

References

Barwell, R and J S Chadha (2014), “Publish or be damned – or why central banks need to say more about the path of their policy rates”, VoxEU.org, 31 August [http://www.voxeu.org/article/publish-or-be-damned-or-why-central-banks-need-say-more-about-path-their-policy-rates]

Eichengreen, B and P Geraats (2015), “The Bank of England fails its transparency test”, VoxEU.org, 6 January [http://www.voxeu.org/article/bank-england-fails-its-transparency-test]

Goodhart, C A E (2015), “The UK MPC process in the light of the Warsh Review”, VoxEU.org, 2 March [http://www.voxeu.org/article/changes-bank-england-s-monetary-policy-meetings]

Hansen, S, M McMahon and A Prat (2014), “Transparency and deliberations within the FOMC: A computational linguistics approach”. [http://www2.warwick.ac.uk/fac/soc/economics/staff/mfmcmahon/research/fomc_submission.pdf]

 

Morris, S and H S Shin (2002), “Social value of public information”, American Economic Review 92(5), pp. 1521–34.

Lepetyuk, V and C A Stoltenberg (2013), “Policy announcements and welfare”, Economic Journal 123, pp. 962-997.

Lindsey, D E (2003), “A modern history of FOMC communication: 1975-2002”, Federal Reserve Board of Governors. [https://fraser.stlouisfed.org/docs/publications/books/20030624_lindsey_modhistfomc.pdf]

 

 

[1]   The Warsh review is available at http://www.bankofengland.co.uk/publications/Documents/news/2014/warsh.pdf. For the full background and documentation please see http://www.bankofengland.co.uk/publications/Pages/news/2014/168.aspx.

[2] See page 7 of the Warsh review.

[3] See page 2 of the Bank’s response, which is available at http://www.bankofengland.co.uk/publications/Documents/news/2014/warshresponse.pdf.

[4] The Bank is minded to move to eight policy meetings a year, but this will require a change in the Bank of England Act (1998).

[5] In the past, the Bank did typically not provide a rationale if there was no change in policy.

[7] See, for example, Morris and Shin (2002) and Lepetyuk and Stoltenberg (2013).

[8] Also, see Barwell and Chadha (2014).

[9] See Lindsey (2003, pp. 1001-111) and Hansen et al. (2014).

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How the experts responded

Simultaneous release of policy decision and related documents

Participant Answer Confidence level Comment
Angus Armstrong's picture Angus Armstrong National Institute of Economic and Social Research Disagree Confident
I welcome with the changes for the announcement and enhanced minutes. I can also see the benefits to simultaneously releasing the Inflation Report in reducing the number of news events. But assuming that the Report cannot be finished and published overnight, then the Report may not have the full information available to the MPC when it made its decision. The announcement and enhanced minutes are likely to overshadow the Report possibly resulting in less analysis and discussion (and feedback to the Bank). So I do not believe simultaneous publication of the Inflation Report will facilitate inference.
Jonathan Portes's picture Jonathan Portes KIng's College, London Neither agree nor disagree Confident
I think it unlikely that these changes will in themselves have a material impact on the information transmission mechanism.
Martin Ellison's picture Martin Ellison University of Oxford Agree Confident
The timely release of information relating to central bank actions should improve the ability of the market to infer the stance of monetary policy, provided that markets are able to process that information efficiently. The most prominent challenge to efficiency is the ‘beauty contest’ idea, first formulated by Keynes and updated by Morris and Shin. There, the concern is that market participants discount their private information and instead become ‘fixated’ on the information provided by the central bank. Whilst this is an elegant and rational theoretical construct, I have reservations about whether this is really a regular issue for the Bank of England. Several academic papers have shown the fragility of the result in slightly different settings, e.g. in 2004 Hellwig argued in a working paper that releasing public information is unambiguously good because the benefits of reduced price dispersion dominate any costs of markets potentially becoming fixated.
David Cobham's picture David Cobham Heriot Watt University Disagree Confident
There is a real danger of a deluge of information giving the appearance of transparency but in fact just drowning the observers. Warsh’s recommendation 1 offers a better compromise between the need for more effective communication of information and the need to maintain an effective decision-making process. It should be possible, with the help of an improved secretariat, for the MPC to produce an agreed short rationale of its decisions, agreements and disagreements (maybe less than Warsh’s half a dozen paragraphs) within say one hour of the decision, and publish that together with details of the vote.
Paul De Grauwe's picture Paul De Grauwe London School of Economics Neither agree nor disagree Not confident
My expertise in these issues is close to zero
Wouter Den Haan's picture Wouter Den Haan London School of Economics Agree Confident
Under the current system, the minutes could possibly be affected by what happens AFTER the release of the policy decision. For example, if financial markets respond unfavorably, then there may be a temptation to change the minutes to save the image of the MPC. This problem, whether it is perceived or real, is no longer present under the new system. Releasing the inflation report at the same time means that the policy decision can be backed up by more solid evidence and actual numbers. To help the market digest the simultaneous release of all the relevant MPC documents, the Bank should give some guidance, especially initially, but the staff of the Bank should be capable of doing this.
Sushil Wadhwani's picture Sushil Wadhwani Wadhwani Asset Management Agree Confident
For example, we have had several instances when the Inflation report press conference has been misleading, because the Governor presenting the Report has failed to accurately reflect the weight of opinion on the committee. Having the minutes appearing simultaneously might well help with this problem. Similarly,it is of some advantage for markets to know that a decision is finely balanced(say, a 5-4 vote) versus a unanimous decision at the time of the interest rate announcement, as it provides more complete information in assessing future monetary policy prospects.
John Driffill's picture John Driffill Birkbeck College, University of London Agree Confident
it will, as the question asks 'facilitate inference', perhaps slightly better than the current arrangements do. But it does not seem to be a radical improvement.
Gianluca Benigno's picture Gianluca Benigno London School of Economics Disagree Not confident
the simultaneous release of the enhanced minutes and Inflation Report might contain too much information.
Nicholas Oulton's picture Nicholas Oulton London School of Economics Agree Confident
Alan Sutherland's picture Alan Sutherland University of St. Andrews Disagree Confident
Kate Barker's picture Kate Barker British Coal Staff Superannuation Scheme Strongly Agree Extremely confident
Past practice often led to the markets interpreting the I Report one way and the minutes a different way. This will now be avoided. However, having these documents out at the same time as the vote is rather ambitious. i don't think putting them into the following week would have mattered.
Michael Wickens's picture Michael Wickens Cardiff Business School & University of York Agree Very confident
The earlier publication of MPC decisions is clearly advantageous. It is also helpful to know about the reasons for the decision and about the issues discussed. There is, however, still much merit in retaining anonymity on who said what. This is in order not to inhibit discussion on the MPC and to allow members "to change their minds if the facts change" without fear of public opprobrium..
Mike Elsby's picture Mike Elsby University of Edinburgh Neither agree nor disagree Not confident
Richard Portes's picture Richard Portes London Business School and CEPR Agree Not confident
Simon Wren-Lewis's picture Simon Wren-Lewis University of Oxford Disagree Confident
The Warsh Review recommendations made sense. The Bank's response does not, for reasons set out quite clearly in the piece by Eichengreen and Geraats. If the Bank seriously wants to improve its transparency, it should make and publish forecasts of what interest rates will be, as the Fed now does.
Panicos Demetriades's picture Panicos Demetriades University of Leicester Agree Confident
On balance, more information enhances transparency, although too much information released at the same time, if conflicting, can also cause confusion.
Joseph Pearlman's picture Joseph Pearlman City University London Agree Not confident
George Buckley's picture George Buckley Deutsche Bank Agree Very confident
Releasing information simultaneously avoids the problem that we've had in the past where, on most occasions when the Bank doesn't change policy, for quite some days afterwards we are not told the reasons why. Moreover, it seems anachronistic that at the Bank's Inflation Report press conference the Governor cannot currently discuss in detail the debate - and the vote - on the Committee at its policy decision a week earlier because the minutes are not published. The Bank's new arrangements will correct for that. True - there will be more informatio for economic journalists and commentators to digest on the day itself - particularly Inflation Report days. But the risk of receiving too much information is surely better than a constant drip feed of information related to the same policy and forecast decision over the course of two weeks.
Silvana Tenreyro's picture Silvana Tenreyro London School of Economics Agree Very confident
I think the simultaneous release of information will be helpful in understanding the policy decision.
Jagjit Chadha's picture Jagjit Chadha National Institute of Economic and Social Research Disagree Very confident
A compact statement accompanying the announcement to include the vote makes a great deal of sense as I have argued for a number of years. But there is merit in having enhanced minutes published with a short lag so that aspects of the risks facing monetary policymakers can be digested in between meetings. The Inflation Report, as a full blown forecast, can also be thought of as an exercise worthy of scrutiny, per se, and also an opportunity to consider longer term factors in the policy decisions.
Ethan Ilzetzki's picture Ethan Ilzetzki London School of Economics Neither agree nor disagree Not confident
As an academic, I don't require MPC information at a frequency where this distinction matters. I can't assess how this affects market participants.
Richard Dennis's picture Richard Dennis University of Glasgow Agree Confident
Market participants and the public more broadly are likely to better understand the rationale behind policy decisions when they are given greater insight into the context and thought process that gave rise to the decision. Although the release of greater information may lead to an initial period of learning, market participants are likely to identify quickly the documents and sections of documents that are most relevant.
Andrew Mountford's picture Andrew Mountford Royal Holloway Disagree Not confident
I don't see why simultaneity matters. What does matter is transparency. Its important that the public and the markets know the rationale and information/data behind policy makers' decisions. This allows faulty reasoning and analysis to be challenged and corrected and should also make future decisions more easy to predict. Clearly a long delay would reduce transparency but a couple of weeks shouldn't matter. It would still leave plenty of time before the next interest rate decision.
Sir Christopher Pissarides's picture Sir Christopher... London School of Economics Strongly Agree Extremely confident
The main advantage is that nothing will be "hidden" by the Bank for a few more days, which could lead to more speculation about its content. Admittedly, people will be selective in what they read and take into account but if they ignore important information it will be their problem, not the Bank's
Patrick Minford's picture Patrick Minford Cardiff Business School Disagree Confident
This question needs to be considered against the background of the policies the Bank has adopted since 2007 when the crisis first erupted. During this period we have had various degrees of transparency about both monetary policy and financial stability policy. But the main facts have been that for all this information there have been serious policy mistakes (the worst being the Bank's failure to cooperate fully with the Fed and US policymakers over the Lehman affair which precipitated the worst part of the crisis) and quite a lot of confusion about what the overriding aims of monetary and financial stability policy were. For example were they to get banks back on their feet lending strongly to advance the recoevcry or were they to blanket them in regulative chains to prevent any 'risky lending' (their job, one would have thought). Was QE intended to jolt lending and money supply growth back into action, and if so what was its relation to bank regulation? On all these important matters there was complete confusion where there was not utter silence. yet we kept on getting 'minutes' and 'reports' which told us nothing much at all. So my reason for disagreement is that I think these measures will have no effect on the central questions of the Bank's policy aims. There is a further implication: 'transparency' is essentially a natural concomitant of agreed and clear policy. When there is no such agreement or clarity, then transparency is no substitute; it can contribute nothing. Indeed if badly handled it simply reveals confusion which worsens things. A competent organisation will sidestpe any transparency in these circuumstances by various well-known bureacratic means- which is of course just as well.
Charles Nolan's picture Charles Nolan University of Glasgow Neither agree nor disagree Very confident
I don't think there is a much of an issue with how the system works at present; no big problem seems to need fixing. Hence, I am inclined to think that this won't make much of a difference either way.
Michael McMahon's picture Michael McMahon University of Oxford Agree Confident
I think there is still a lot to understand about how Central Bank communication affects markets and what markets garner from the Central Bank. That said, when a surprising decision is announced, markets will want to learn whether the surprise was (broadly) driven by new views on the state of the economy (which would come out with the Inflation Report or the minutes) or whether it was some change in the committee reaction function (which might come out in the voting record). Providing all the information at once will allow the market participants to have common information about the content of the various information sets without having to endure a few weeks of possible misinformation and speculation.
Jim Malley's picture Jim Malley University of Glasgow Disagree Not confident
Francesco Caselli's picture Francesco Caselli London School of Economics No opinion Confident
Morten Ravn's picture Morten Ravn University College London Strongly Agree Very confident
The simultaneous release of the Inflation Report, the minutes and the MPC decision is a good move. It enables market participants to gain a good understanding of the background for the current decision and for what is to come down the road. Compare it with a situation where the release of information does not occur simultaneously and where new information arrives in the intermittent period - such a schedule would question why policy should not react to the new information. So, as such, this is a good move.
Costas Milas's picture Costas Milas University of Liverpool Agree Confident

The proposed MPC schedule

Participant Answer Confidence level Comment
Angus Armstrong's picture Angus Armstrong National Institute of Economic and Social Research Disagree Confident
The Bank uses the simultaneous release and the need to safeguard the integrity of the decision making process and of the (to be enhanced) minutes to justify the changes in the meeting schedule. I can see that producing enhanced minutes takes more than one evening which would be required under the current meeting and proposed publication schedule. So I accept that a change to the timetable is required. Official (and enhanced) minutes take time, but I struggle to see how they justify going to such a long schedule. The longer the gap between deliberations and decision, the less useful the minutes are likely to be.
Jonathan Portes's picture Jonathan Portes KIng's College, London Agree Not confident
Broadly, the new schedule seems sensible, but it is not clear how it will work in practice. It is possible that there may be unintended consequences.
Martin Ellison's picture Martin Ellison University of Oxford Agree Confident
The practicalities of collating and processing minutes is likely to be a constraint that speaks for the revised timetable. It is imperative that information released by the central bank is of good quality, otherwise monetary policy would be injecting extra ‘noise’ into the economy. There is an obvious trade-off between the timeliness and quality of information, which the Bank of England’s proposal seems to address reasonably.
David Cobham's picture David Cobham Heriot Watt University Strongly Disagree Very confident
There is a risk of harm to the decision process from spreading it out, there is the problem of news arriving in the meantime, and there is a loss of transparency from the delay in communication (despite the cosmetic fix of having the actual decision taken only the day before). The focus should be not so much on transparency, which is of course a means not an end, but on accountability: we want procedures which ensure that the MPC has to explain itself and engage with its critics (politicians, press, academics, civil society…), both for ‘democratic deficit’ reasons and because such procedures will maximise the MPC’s ability to influence in a useful way the private sector’s expectations of inflation and growth. The Bank’s proposal offers high, even excessive, transparency with no improvement in accountability.
Paul De Grauwe's picture Paul De Grauwe London School of Economics Neither agree nor disagree Not confident
I have very little expertise in these issues
Wouter Den Haan's picture Wouter Den Haan London School of Economics Agree Confident
It is possible that spreading out the meetings will make the process less focused and may make it more difficult to respond to the very latest developments. however, the chance that something completely new and relevant happens during the week of the MPC process is simply not that big.
Sushil Wadhwani's picture Sushil Wadhwani Wadhwani Asset Management Agree Confident
Once you decide that you want to release the information simultaneously, you have no choice but to elongate the period over which the meetings are held. However, the risk of leaks should not be underestimated. A pretty large number of people will know the likely decision for seven days,something which is pretty dangerous. Remember that the set of people who will know the probable decision will include the Prime MInister and Chancellor(and their special advisers).
John Driffill's picture John Driffill Birkbeck College, University of London Neither agree nor disagree Confident
It is difficult to get excited about these changes They seem minor. it is clear they need to spread the meetings out over a longer period to write up minutes in time for release with the announcement. They will produce frresher minutes of staler discussions. The benefits are not obvious. The financial markets may like these changes, believing they will make more money with the additional information. The public in general and the 'real economy' will notice no difference.
Gianluca Benigno's picture Gianluca Benigno London School of Economics Disagree Confident
Spreading the MPC meeting over seven days seem to me quite a lot and it is likely to make the minutes outdated when new information comes in during that period.
Nicholas Oulton's picture Nicholas Oulton London School of Economics Agree Confident
In agreeing with the question I am assuming that the frequency of meetings will be reduced from 12 to 8 per year (except in emergencies). A reduction in frequency is a good idea in itself as monthly meetings encourage over-interpretation of news. They are also a treadmill for the staff.
Alan Sutherland's picture Alan Sutherland University of St. Andrews Disagree Confident
Kate Barker's picture Kate Barker British Coal Staff Superannuation Scheme Agree Very confident
Could not alter the publication schedule without this change. And previously there was sometimes less time than I would have liked to reflect on the Wednesday discussion before voting.
Michael Wickens's picture Michael Wickens Cardiff Business School & University of York Disagree Very confident
I don't see any connection between the decision to release information at an earlier date and the frequency of meetings. Given the inactivity of the MPC over the last few years, having fewer meetings makes sense. If a crisis arose in the gap between meetings that requires the MPC to meet then I hope that the new timetable would not prevent such a meeting taking place.
David Bell's picture David Bell University of Stirling Agree Confident
This proposal cannot be seen as distinct from the decision to reduce the number of meetings from 12 to 8 per annum. It has never been clear to me why one needs, in normal circumstances, to have a high-frequency instrument to affect an outcome 18 months to two years ahead. I therefore agree with the proposal as part of the overall package. However, I would also urge caution if the new, more extended, structure of meetings might have an adverse impact on recruitment to the MPC.
Mike Elsby's picture Mike Elsby University of Edinburgh Disagree Not confident
Richard Portes's picture Richard Portes London Business School and CEPR Disagree Not confident
Panicos Demetriades's picture Panicos Demetriades University of Leicester Agree Very confident
They clearly need more time to check and agree the minutes, if they are to be released at the same time as the policy decision.
George Buckley's picture George Buckley Deutsche Bank Agree Confident
Not only does the new system allow for the simultaneous publication of documents, but in addition it gives the MPC time to 'sleep' on the decision making process when it comes to monetary policy. Holding a "meeting" over a week could help focus policymakers' minds on the broader issues and avoid potentially rash decisions being made on the basis of how policymakers are feeling on any one day - just as holding fewer policy meetings a year should do too. In other words, it may help policymakers see far more 'wood' than 'trees'. We doubt that the disadvantages related to concerns about leaks are warranted - after all, the Inflation Report itself takes quite some time to put together and by a far larger workforce within the Bank (than the MPC), yet that is never leaked. Plus, with the policy decision being made just the evening before the announcement there is little opportunity for leaks to happen.
Joseph Pearlman's picture Joseph Pearlman City University London Agree Confident
Silvana Tenreyro's picture Silvana Tenreyro London School of Economics Agree Confident
I think the Bank's proposal of simultaneous release of information justifies the change in structure of MPC meetings.The risk of leaks is hard for me to assess; if this becomes a problem, clearly the Bank will need to re-adjust.
Jagjit Chadha's picture Jagjit Chadha National Institute of Economic and Social Research Strongly Disagree Confident
The proposed timetable of the MPC process looks elongated and cumbersome. The advantage of having immediate minutes from the deliberative part of the meeting seems rather limited compared to the creation of a week-long MPC meeting during which all kinds of news may arrive to complicate the policy decision. I would prefer a short, discrete time period for the policy making decision, rather like the one we currently have.
Ethan Ilzetzki's picture Ethan Ilzetzki London School of Economics Neither agree nor disagree Not confident
Richard Dennis's picture Richard Dennis University of Glasgow Disagree Confident
While useful, the MPC minutes are less important for communicating policy than is a well-reasoned policy statement that provides context for the policy decision along with the member votes. The MPC minutes could be released subsequently, after a short delay to allow their preparation.
Andrew Mountford's picture Andrew Mountford Royal Holloway Neither agree nor disagree Not confident at all
I must be missing something as I don't understand why this matters. If the policy makers are getting the best advice, data and analysis then it shouldn't matter when or how they meet? Is there any evidence that discussion during the committee meeting has ever changed anyone's mind?
Sir Christopher Pissarides's picture Sir Christopher... London School of Economics Disagree Not confident
In principle and with no time constraints the current practice is better. But if it is humanly impossible to write coherent minutes and reports in the very limited time that elapses between decision and public announcement then so be it - try to do it as fast as possible within the constraints
Patrick Minford's picture Patrick Minford Cardiff Business School Disagree Confident
I am afraid that these proposals fall into the category of 'more means worse'. The meetings are longer, more arduous for outside members who need to take a lot more time off, and more exhausting for staff because they need also to prepare all sorts of surraounding documents simultaneously. Furthermore, beside this fact that reducing the frequency adds to the burden, it moves against the natural frequency of news arrival which is monthly; and it reduces the value of the regular 'conversation' the MPC members have which again is monthly in the natural course of events. The fact that the Fed meets eight times is neither here nor there. The Fed is a huge federal agency; the UK is a unitarian state. In between Fed meetings the Chairman can take certain executive action (eg to push fed funds intervention to the bottom or top of the range) and is in practice a dominant figure. The MPC is an executive committee of equals and the Governor does not necessarily speak for them, nor is he empowered to take executive action on monetary policy- on the other policy committees I suppose the theory is similar but we have no experience to judge yet how they will work in practice.
Charles Nolan's picture Charles Nolan University of Glasgow Neither agree nor disagree Very confident
I think there are good reasons to have fewer meetings quite apart from this issue. The long period over which the decision process takes place seems cumbersome and as argued above, I am not sure what the pay off really is.
Michael McMahon's picture Michael McMahon University of Oxford Neither agree nor disagree Confident
Clearly some alternate timetable is necessary if minutes of the deliberation will be prepared (and given the care that tends to be taken with official central bank communication). Whether it needs to be as long as 7 days, I am not sure but it cannot be the same 24 hour process (Wednesday afternoon to Thursday at noon) as it has been since 1997. I am more concerned that the decision will be made on a Wednesday but not announced until Thursday. The overnight delay raises the risks of leaks. It is worth remembering that some of the push for greater transparency is the result of an earlier period during leaks were more widespread; for example, the push for greater Fed transparency of the Fed in 1993 followed a period of leaked interest rate decisions which caused political anger at the Fed's opaqueness.
Jim Malley's picture Jim Malley University of Glasgow Disagree Not confident
Francesco Caselli's picture Francesco Caselli London School of Economics No opinion Confident
Morten Ravn's picture Morten Ravn University College London Neither agree nor disagree Very confident
This is a hard one. No doubt, there will be some speculative trades going on in between the decision being made and it being made public. It is not clear to me that the new arrangement is actually more transparent than the old one. On the other hand, writing minutes is time - and effort - consuming so it would seem hard to have simultaneous releases of all the relevant information without making the process longer. But, if the 7 day period could be shortened, I personally think it would imply a more effective communication strategy.
Sean Holly's picture Sean Holly Cambridge University Disagree Confident
John VanReenen's picture John VanReenen London School of Economics Agree Not confident
Fabien Postel-Vinay's picture Fabien Postel-Vinay University College London Disagree Not confident
Costas Milas's picture Costas Milas University of Liverpool Disagree Confident