Posted on February 9th, 2011 | Categories - News
The MPC shouldn’t be party political according to member Paul Fisher.
The plan for fiscal consolidation is a credible program to boost the economy.
The inner workings of the Monetary Policy Committee (MPC) were discussed this week in an interview with one of its members.
Issues such as internal bickering, policy issues and political misnomers were highlighted by MPC member Paul Fisher who also outlined his support for the Committee’s current programe of low interest rates and bouts of quantitative easing.
The MPC has been under close scrutiny as a result of its ongoing decision to keep interest rates at the historic low of 0.5%. However, factions have now arisen with Andrew Sentence regularly calling for a rate rise to 0.75% and Adam Posen calling for another £50 billion round of quantitative easing.
Last month Mr Posen accused Governor Mervyn King of being too party political signalling the heightened level of tension that the MPC is currently dealing with.
However, Mr Fisher told The Telegraph that he disagreed: “I didn’t see anything party political in what the Governor said. Everything we do is political with a small P. Changing interest rates is political with a small P because it affects people’s lives…What we shouldn’t be is party political. And I think Mervyn’s comments have been just about as far to go as appropriate to signal what was important in terms of monetary policy”.
He also reiterated his support for the MPC’s austerity measures adding that “the important thing from my point of view was that we had a plan for fiscal consolidation that was credible within the lifetime of a parliament. Of course, it is actually better for everybody – it helps not just the Government debt market but the banking sector. It helps, therefore, support lending to the economy. It helps businesses keep people in employment. So you can trace it all the way through to the real economy”.