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What Is The MPC?

The MPC (otherwise known as the Monetary Policy Committee) is a Bank of England committee which meets each month to discuss potential changes in the base rates on the UK, i.e. interest rates. The MPC consists of 9 members from the following areas of business :-

The governor of the Bank of England

The two deputy governors of the Bank

The chief economist of the Bank of England

The director in charge of market operations

And four external members appointed by the Chancellor of the Exchequer on three year terms

After discussing the economic situation each member is given a vote as to whether interest rates should rise, fall of remain unchanged. The MPC is run on a majority voting system and at the moment there are 7 members in favour of no change, 1 looking to raise rates and 1 looking to reduce rates. As a consequence UK rates did not move last month.

In order to relay the details of the meeting to the investment markets the minutes to each meeting are released one month after the event and are often used as an indicator of future interest movements. While the MPC is total independent of the government of the day there have been claims of political interference of late.

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