The Shadow Monetary Policy Committee (SMPC) is a group of independent economists, which has met once a quarter since July 1997 at the Institute for Economic Affairs (IEA) to monitor the Monetary Policy Committee’s Bank Rate decisions, and to make rate recommendations of its own.

Trevor Williams is Joint Chairman with Dr Andrew Lilico, Visiting Professor, Europe Economics.

IEA Shadow Monetary Policy Committee Minutes

(click on the dates below in green to read full article)

 

April, 2024
A majority of the committee voted to cut Bank rate by 50bps immediately.

There was a majority agreement that monetary policy needed to be loosened. There was a majority agreement to halt QT and to stabilise the rate of growth of money in the 4-5% region.

January, 2024
Shadow Monetary Policy Committee votes to cut Bank Rate ¼% to 5%

At its first meeting of 2024, the Shadow Monetary Policy Committee (SMPC) voted unanimously for a cut in the
Bank rate at the next Monetary Policy Committee (MPC) meeting. It also voted to cease quantitative tightening
or QT because the money supply was contracting too quickly.

October 2023
Shadow Monetary Policy Committee votes 7 to 2 to cut Bank rates

Six members wanted an immediate cut of 0.25% to 5%, eight of the nine members wanted quantitative tightening (QT) to be halted or scaled back, and one member wanted to restart quantitative loosening (QE).

July 2023
Shadow Monetary Policy Committee votes eight one to hold Bank rate

The Shadow Monetary Policy Committee voted at its quarterly meeting in July to hold the Bank rate at 5%. The vote to hold rates was by a margin of eight to one. No member voted for an immediate cut in rates fearing that this would lead to a loss of credibility for the Bank of England. But a large majority wanted quantitative tightening (QT) to cease instead of a cut in interest rates..

May 2023
The majority of the SMPC voted to hold Bank rate at 4.25%.

There was no consensus on the near-term future of QT. Two members felt that QT should be maintained at the current pre-announced rate. On a vote of six the recommendation of the Committee is that QT be suspended. There was a strong feeling that the policy of paying interest on bank reserves distorts monetary policy and should be abandoned.

January 2023
The majority of the SMPC voted to hold Bank rate at 3.5%.

The majority view was that the interest cycle was at or near its peak. There was no consensus on the future of QT. Three members felt that QT should be abandoned or paused with one expressing a need for the resumption of QE. Three members voted to continue with QT in 2023.

October 2022
The majority of the SMPC voted to raise Bank rate immediately.

In keeping with the voting convention, the Committee recommends that Bank rate
be raised by 75 bps to 3 per cent. There was no consensus on the operation of QT.

July 2022
Raise interest rates to 1.75 per cent immediately, votes Shadow Monetary Policy Committee

This comes ahead of the Bank of England’s MPC meeting this Thursday. Members were split three ways on the size of the rate rise, but the consensus was an increase of half of a point, to 1.75 per cent.

April 2022
The SMPC voted unanimously to raise Bank rate immediately but there was not unanimity on the scale of the rise in Bank rate.

The Chairman said that there was unanimity that rates must rise but as there was not unanimity on the size of the rise in rates. In keeping with the voting convention, the Committee recommends that Bank rate be raised by 75 bps to 1.5 per cent.

January 2022
Shadow Monetary Policy Committee votes to increase bank rate by
75 basis points to 1 per cent

In the first meeting of the year, the Shadow Monetary Policy Committee voted to raise the bank rate by 75 basis points to 1 per cent. While there was unanimity for raising rates, there was a three-way split about the
amount.

October 2021
Shadow Monetary Policy Committee votes unanimously to raise Bank
Rate at its October Meeting

For the first time since March 2018, the IEA’s Shadow Monetary Policy Committee (SMPC) has voted unanimously to raise interest rates. Of the nine members that voted for a rise, eight voted for 0.15% to take the Bank rate to 0.25%, and one voted for a rise to take it to 0.6%.

July 2021
Shadow Monetary Policy Committee votes 7 to 2 to raise Bank Rate in July

At the July video conferencing meeting of the IEA’s Shadow Monetary Policy Committee (SMPC), the vote was seven to two to raise the bank rate. Six members wanted it increased to 0.25% immediately and one to 0.5%. Two members, however, voted to leave it at its current level of 0.1% for the time being.

April 2021
Shadow Monetary Policy Committee votes seven votes to two to hold Bank Rate in May

At its April 2021 meeting, once again by video conferencing, the Shadow Monetary Policy (SMPC) voted by seven votes to two to hold the bank rate at 0.1%. As in the January meeting, there was unanimous agreement that the last round of QE announced in November last year was unnecessary and risked stoking inflation.

January 2021
Shadow Monetary Policy Committee votes unanimously to Hold Bank Rate in February

Warns of upside risks to inflation, arising from a post-COVID boom
In its meeting of 12th January 2021, held by video-conference due to ongoing COVID-19 restrictions, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of nine to zero, to hold rates in February. There was unanimity that the announced programme of additional QE was a mistake, and no further QE should be undertaken. There was a majority view that QE should be reversed once the recovery takes place.

October 2020
Shadow Monetary Policy Committee votes unanimously to Hold Bank Rate in November and rejects proposals for negative interest rates

In its meeting of 13th October 2020, held by video-conference due to ongoing COVID-19 restrictions, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of nine to zero, to hold rates in August. One member favoured extending Quantitative Easing (QE) before the end of this year. Three favoured reducing QE once recovery is established.

July 2020
SMPC votes unanimously to Hold Bank Rate in August.

In its meeting of 14th July 2020, held by video-conference due to ongoing COVID-19 restrictions, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of nine to zero, to hold rates in August. Five members favoured holding Quantitative Easing (QE) at its current level. Two favoured reducing QE. Three expressed a bias to raise rates as soon as recovery took hold.

May 2020
SMPC votes Nine / Nil to Hold Bank Rate in May

In its April 2020 poll, held via video conference, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of nine to nil, to hold rates in May.

January 2020
SMPC votes Six / Three to Hold Bank Rate in January

In January 2020, the Shadow Monetary Policy Committee (SMPC) voted by six votes to three to keep Bank rate at 0.75%. But six of those who voted had a bias to raise rates in the next few months.

September 2019
SMPC votes Six / Three to Hold Bank Rate in September

An email poll of members of the Shadow Monetary Policy Committee (SMPC) carried out in late August, and early September 2019 resulted in a vote to keep interest rates on hold by six to three, the same margin as in July.

May 2019
SMPC votes Five / Four to Hold Bank Rate in April

At its second full meeting of 2019, held in April, the Shadow Monetary Policy Committee (SMPC) voted by a narrow margin to keep Bank rate at 0.75%. Five voted to hold rates and four voted for a ¼ point rise.

March 2019
SMPC votes unanimously to hold Bank rates in January

The Global Economy Backdrop:
Julian Jessop referred to his presentation slides. He said he will begin with the global backdrop, then move on to the recent performance of the UK economy, before concluding with a discussion of Brexit risks.

September 2018
SMPC votes Six / Three to Hold Bank Rate in September.

In its September 2018 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of six to three, to hold rates in June. The three favoured a 0.25% rise.

May 2018
SMPC take poll on Bank rate raise in May

Ending six months of unanimity for rate hikes, the Shadow Monetary Policy Committee (SMPC) voted at its April meeting to raise Bank rate in May by eight votes to one. Six of the nine wanted to see a rise of ¼%, two an increase of ½% and one a hold. Seven members had a bias to tighten, and two had a neutral bias.

March 2018
SMPC votes to raise Bank Rate in March

An email poll of the Shadow Monetary Policy Committee (SMPC) in March produced a vote to raise interest rates by nine to nil. All nine members voted for ¼% increase to a Bank rate of 0.75%. The bias of eight members was for further tightening and one for a neutral stance.

January 2018
SMPC votes unanimously to raise bank rate this month

For a second consecutive meeting (16th January), the Shadow Monetary Policy Committee (SMPC) voted unanimously to raise Bank rate in February. Six of the nine wanted to see a rise of ¼% and three an increase of ½%. Furthermore, there was a unanimous bias to tighten. One wanted to see QE reversed, worried about the mispricing of risk in financial markets owing to central bank injections of liquidity and active buying of bonds.

December 2017
Shadow Monetary Policy Committee votes to raise Bank Rate in December.

In its December email poll, the Shadow Monetary Policy Committee (SMPC) voted to raise Bank rate by seven to two. All of those that voted to increase Bank rate wanted to see ¼%. The bias of all nine members was for further tightening, but gradually.

October 2017
Shadow Monetary Policy Committee votes unanimously to raise Bank Rate in November.

At its October 2017 face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) voted unanimously to raise Bank rate in November. This outcome is the most decisive vote in well over ten years. Of the nine, six wanted to see an immediate hike of ½%, while three preferred to see a ¼% increase.

September 2017
Shadow Monetary Policy Committee votes eight / one to raise Bank Rate in September.

In its e-mail poll for September – the Shadow Monetary Policy Committee (SMPC) voted by eight votes to one to raise Bank rate. Five members voted to raise Base rate by 50bps. Three voted to raise by ¼%, and one was to hold.

July 2017
Shadow Monetary Policy Committee votes eight / one to raise Bank Rate in August.

At a quarterly face-to-face meeting in July, the Shadow Monetary Policy Committee (SMPC) voted by eight votes to one to raise Bank rate. Three members voted to raise Base rate by 50bps. Five voted to raise by ¼% and one voted to hold.

April 2017
Shadow Monetary Policy Committee votes seven/two to rise Bank Rate in May

At its April 2017 face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) voted by seven to two, to raise Bank rate in May. Three members voted to raise Base rate by 50bps. Four voted to raise by ¼%.

March 2017

Shadow Monetary Policy Committee votes seven/two to rise Bank Rate in March

In its March 2017 e-mail poll, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of Seven to Two, to raise rates in March. Three members voted for an immediate rise of 0.5%. Fourther favoured a 0.25% rise.

January 2017

Shadow Monetary Policy Committee votes six/three to raise Bank Rate in February

At its most recent face-to-face meeting, the Shadow Monetary Policy Committee (SMPC) elected, by a vote of six to three, to raise the rate by 25 bps in February. Two members voted to raise Base rate by 50bps. There was unanimous bias to raise rates in the near future.

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