MNI: BOE Policy Report To Include Indicative Rate Paths

The Bank of England Monetary Policy Committee's quarterly policy decision communications will include rules-based policy rate paths, reintroduce scenarios and include more detailed inputs to monetary policy decisions starting from the Nov 6 meeting, officials said.

Following on from comments in a speech by Chief Economist Huw Pill on Oct 17 and position papers published the same day, Bank officials confirmed that as of next week, the MPC will publish a slimmed down Monetary Policy Summary at every meeting, alongside minutes which will include individual member opinions running to up to around 200 words each. The overview summary of where the committee sits as a whole will still be included.

The BOE will also publish alternative scenarios and alternative projections to the Central Projection -- still based on market rates -- illustrating "how things might turn out differently from the central case in ways that reflect the most pressing policy concerns right now". 

RATE PATH

There will also be some analysis of alternative indicative paths for interest rates attached to both the alternative scenarios and the central projections, which will be numerical rather than just qualitative, officials noted. (see MNI INTERVIEW: Bernanke Forces BOE Rate Path Verdict - McMahon )

However, while the rate paths will be lines on a chart, they will not be dot plots and will not be MPC forecasts. The rate paths will not be determined by the MPC, but will be based on policy rules derived from the economic literature as set out in papers published in mid-October.

The MPC will no longer publish forecasts on a Constant-Market rate basis, a metric that few in the Bank use.

The quarterly Monetary Policy report will also include "a wider range of perspectives and inputs considered by the MPC," and will contain "a number of boxes covering issues most pertinent to the monetary policy decision, as well as a section on risks and scenarios," Pill said in his speech.

"While this may appear more complex at first reading, it will prove to be more transparent," he added.