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IEA - Shadow Monetary Policy Committee calls for Bank Rate to be raised

IEA's SMPC votes decisively for Bank Rate raise

The Institute of Economic Affairs’ Shadow Monetary Policy Committee has voted decisively – eight votes to one – to recommend that the Bank of England’s Monetary Policy Committee raise interest rates immediately.

The SMPC’s reasoning for voting for a Bank Rate rise are as follows:

  • To reverse what was seen as a unnecessary cut last year
  • Monetary statistics supported a faster growing economy than current data suggested and so liquidity was plentiful
  • It’s time the emergency level interest rate that is still prevailing, began to return to normality​

Commenting on the SMPC’s vote to raise the Bank Rate, Philip Booth, Senior Academic Fellow and member of the SMPC at the Institute of Economic Affairs, said:

“Many members of the SMPC warned publicly of the dangers of rising money supply growth before the financial crisis. They also proposed the idea of quantitative easing in order to stop the slump in the money supply after the financial crisis. Unfortunately the Bank of England seems to be ignoring the developments in the real economy, and in monetary statistics at its peril.”

Notes to editors:

For media enquiries please contact Nerissa Chesterfield, Communications Officer: nchesterfield@iea.org.uk or 020 7799 8920 or 07791 390268

To view the full minutes from the Shadow Monetary Policy Committee’s July meeting, please click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

The IEA is a registered educational charity and independent of all political parties.

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