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MPC Two Short

Mervyn King, the governor of the Bank of England and chair of the Monetary Policy Committee (MPC), has been outspoken recently about the fact that replacements for Richard Lambert and David Walton on the MPC have not yet been appointed.

The decision on who will be appointed as the new members rests with the treasury, and ultimately, with the Chancellor Gordon Brown. Some have commented that the governor’s expressions of frustration with regards to the process are an attack on the Chancellor as well as on the systems in place.

When choosing a member to join the MPC, the entire process is done behind closed doors, with the list of potential candidates kept under wraps for fear of a shortlist triggering moves in the economy based on analysts views of how the chosen candidate would influence the decisions in the rate-setting meetings.

King commented that the current system in place for appointing MPC members was too informal and that it “seems to result in appointments being made very much at the last minute.” - something which he stated was of no benefit to anyone.

As things currently stand, what should be a nine-strong team is down to just seven members, due to the recent death of David Walton and the retirement from the committee of Richard Lambert who stepped down in order to take a position as director-general of the Confederation of British Industry.

It looks as though the rate setting meeting of next month will have to take place with just those seven members in attendance, while Mr King may not be happy with this situation, at least he can rest assured that there will not be any chance of a deadlock on the voting.