Following its latest quarterly meeting the IEA Shadow Monetary Policy Committee (SMPC) voted to cut Bank Rate by a further 0.5% on Thursday 9th November. In particular, six members of the shadow committee voted to cut Bank Rate by 0.5%, with a bias to ease in future months; one member voted for an immediate reduction of 1%; and two members preferred to leave Bank Rate at the 4.5% announced on Wednesday 8th October for the time being.
There was a general view that changes in the official REPO rate were too weak an implement on their own to be useful in current circumstances. This explains and justifies the liquidity and re-capitalisation measures introduced by several central banks in October. Some SMPC members believed that further alternative policy approaches, including a possible deliberate underfunding of the Budget deficit, also needed to be considered.