Reaction Functions of Bank of England MPC Members: Insiders versus Outsiders

Christopher Spencer

No 606, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: In 1997, the Bank of England was granted operational responsibility for setting interest rates to meet a Government inflation target of RPIX 2.5 percent. As part of the shift towards independence, operational decisions on monetary policy were delegated to a Monetary Policy Committee. Using voting data obtained from Minutes of Monetary Policy Committee Meetings, I show that as a group, internally appointed MPC members (insiders) on average prefer higher interest rates than external appointees (outsiders). Further, ordered logit analysis demonstrates that insiders and outsiders are motivated by different concerns when setting interest rates, with the interest rate setting behaviour of outsiders being less easy to predict than those of insiders.

Keywords: Monetary Policy Committee; insiders; outsiders; voting (search for similar items in EconPapers)
Pages: 45 pages
Date: 2006-03
New Economics Papers: this item is included in nep-cba, nep-dcm, nep-mac and nep-mon
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0606

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