Do different opinions make the MPC work?
Only a few days ago we saw MPC member Andrew Sentance step into the limelight to suggest that UK base rates could rise in the medium term to offset the risk of inflation. However, today we see fellow MPC member David Miles suggesting that UK base rate will not rise in the short term with the risk of inflation set to subdue and the real risk being that of a slowdown in the UK economy if fiscal tightening occurs too quickly. So do different opinions held the MPC?
There is no doubt that there are very different, and very strong, opinions held by various members within the MPC. However, this is the reason why the MPC is made up of a number of independent experts who ultimately arrive at a consensus agreement on a monthly basis. While much has been made of the potential threat of inflation, the potential threat of a slowdown in the UK economy, if interest rates rise too quickly, is possibly the main issue at the moment. However, even David Miles acknowledges that inflation could be an issue in the short to medium term although he believes that the pressure on prices is set to weaken over the next few months.
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