In its most recent poll, finalised on 26th February, the Institute of Economic Affairs (IEA) Shadow Monetary Policy Committee (SMPC) decided by seven votes to two that Bank Rate should be raised on Thursday 6th March. In particular, five SMPC members voted for an increase of 1⁄2%, two members voted for a rise of 1⁄4%, and two wanted to leave rates unaltered. This pattern of votes would give rise to an unambiguous increase of 1⁄2% on the usual Bank of England voting procedures.
The IEA shadow committee’s rate recommendation contrasts with the view taken by Mr Carney at his 12th February Inflation Report press conference. Individual SMPC members had a variety of reasons for not being persuaded by the Bank’s analysis. However, there was a general suspicion that the concept of ‘slack’ used to justify freezing Bank Rate was so immeasurable in practice that it was incapable of operational implementation. It was also suggested that the Bank’s underlying theoretical model, which justified the emphasis on slack, was itself inadequate as a description of a small,