Thursday, June 14, 2007

PR exercise?

Brown 'opens up MPC appointments'

Gordon Brown has announced changes to the way members of the interest-rate setting Bank of England monetary policy committee are appointed.

Posted by tyrellcorporation @ 10:23 AM (2779 views)
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6 thoughts on “PR exercise?

  • Closing the stable door after the horse has bolted?

    “The committees has nine members – five Bank of England staff and four external members appointed by the chancellor.”
    Although technically accurate, this sentence misrepresents the Chancellor’s grip on the MPC under the current system. Of the 5 BoE staff, the Chancellor has the final say over two of the appointments. (enabling Brown to weed out those with Blairite or Tory leanings, until he gets just the sort of Brownite-leaning BoE executive he wants). The remaining 3 BoE staff are the governor and the two deputy governors. Like I have said many times before – the MPC is about as independent as a ventriloquist’s dummy.

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  • fahrenheit451 says:

    So the BoE Base Rate was previously set by the Govenor of the BoE and the Chancellor. Is the govenor an appointment made by the Chancellor anyway? And now the Base Rate is set by the MPC, who are lead by the Govenor (no change), two deputy governors (who owe their allegance to the Govenor, or loose their jobs?), two BoE staff (vetted / veto-ed by the Chancellor), and 4 persons appointed by the Chancellor anyway.

    Sounds like its the same as before, except if there is any political fallout from bad decisions by the MPC, the Chancellor walks away and “nothing to do with me mate!”

    It’s a con-trick.

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  • F451,

    It gets even better than that. Guess who the Office of National Statistics reports to ?
    http://www.statistics.gov.uk/about_ns/ONS/default.asp

    So GB decides who’s on the MPC, what their inflation target is, and how that measure of inflation is arrived at.

    You’ve got to hand it to him, he’s got it sewn up, and as far as Joe Bloggs in the street is concerned, interest rates are now set independently by the BOE.

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  • george monsoon says:

    Whatever the politics, it highlights the fact that the soon to be PM is worried about controling Interest rate changes.

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  • True George,

    The man is a control freak!

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  • GB won’t want to rock the economic boat until the next election. That’s why his answer to high house prices is to say ‘build more’ – he knows full well that by the time his plans have gone through the planning system and NIMBY’s legal action there will be no discernable change in the rate of house building. It looks like he’s taking action when in fact he’s doing nothing – kicking the ball into the long grass.

    The real reason why FTBs can’t afford houses is that there’s too many people that can afford to buy more than one house – BTLs, people with holiday homes etc. However these are Middle England, so he can’t upset them either – at least not yet.

    So his gambit will be to keep interest rates low (and Middle England happy) by hiding inflation. Using the boiling frog technique, hopefully no one will notice.

    In the meantime he can fob off the priced out FTBs by saying he’ll build more.

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