Thread by @t0nyyates

I support Andrew's call for a TC review of the MPC.

https://twitter.com/asentance/status/1488429868572422146

I think that all the big calls; very low interest rates since the GFC; QE, were the right ones. Forward guidance was the right thing to do but handled badly.

Andrew has a point about diversity on the MPC. Controversies rage in economics about everything, including monetary econ and finance. Yet the range of votes on the MPC is tiny and there is almost no disagreement about anything, ever.

I think the preponderence of internal BoE votes to externals is too high. Internals might find it hard to vote against their bosses and so behave like a bloc vote. Cut the number of internals, or increase the externals or both.

It's also too easy to migrate from being an extenal to an internal member [see, eg Broadbent]. This can encourage externals to engage in 'good behaviour' so that they are more likely to land an internal job and quelling dissent.

Also, transits from the Treasury/govt in general to the BoE weaken central bank independence. Dave Ramsden, a great appointment on its own merits, is the most recent beneficiary of this, but there were others in the past. [Cunliffe, Lomax, Gieve].

This aspect of the appointments norms is of particular concern when you are doing large scale QE at the same time as the government is running large deficits: such a policy looks just like the BoE is being leaned on to help the government out.

Having former Treasury officials on the BoE policy boards looks like you are abusing the appointments process to make sure that the BoE does what you want it to. [Even though I don't think this is what has gone on in this case].