Bank of England to 'remove drip-feed of news'

The Bank of England Image copyright AFP

From 2015, the Bank of England will publish policy decisions and minutes of policy meetings at the same time, in an effort to communicate more clearly with the public.

At present, minutes of Bank policy discussions are made public around two weeks after decisions are given.

The move will make it easier for investors and firms to interpret signals from the Bank, an analyst said.

The number of policy meetings will also be cut from 12 to eight per year.

Bank of England governor Mark Carney said: "By removing the present drip-feed of news... in favour of a single monetary policy announcement, we believe these arrangements will enhance the effectiveness of our monetary policy communications, making the policy signals we send as clear as possible."

In June Labour MP Pat McFadden likened the Bank to an "unreliable boyfriend", saying there had been a lack of clarity about the possible timing of interest rate rises.

While single policy announcements will take place from August 2015, reducing the number of Monetary Policy Committee (MPC) meetings will need a change to the law.

Chancellor George Osborne said he would seek to review the Bank of England Act after the next election.

"Ensuring the Bank is well positioned to fulfil its vital role of overseeing monetary policy and financial stability is a key part of the government's long term economic plan," he said.

The MPC's main task is to keep inflation as close to 2% as possible, but it also sets interest rates.

The alterations should make it easier for people to decode the Bank's signals more accurately, according to Howard Archer, chief UK and European economist at IHS Global Insight.

"Publishing the minutes of the Monetary Policy Committee meetings at the same time as the policy decision is made should allow analysts and the markets to make more informed views of the Bank of England's action and where policy is likely headed.

"This should help to limit the risk of potentially damaging market swings that can occur when a policy decision is taken but the full (if any) reasons are not known for two weeks after.

"It should also reduce the risk of misinterpretations of the Bank of England's policy decision by analysts, the markets and corporate decision-makers." Mr Archer added.

The Bank's transparency and accountability drive follows a review by former Federal Reserve board governor Kevin Warsh, who said the current schedule of 12 meetings was "inconsistent with best practice".

Mr Warsh called for the details in the MPC minutes to be enhanced to expand on the "crux of the deliberations".

"That way, businesses, households and investors can gain a better sense of the key judgments with which the MPC is wrestling."

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