Wednesday, August 19, 2009
Dovish King outvoted
Posted by David Smith at 08:00 PM
Category: Thoughts and responses

Mervyn King is said to observe that having Tim Besley on the monetary policy committee (MPC) has provided an important bulwark for his desire to put a bigger emphasis on broad money, M4. This King-Besley alliance provided two out of the three of the minority at the August MPC meeting. The two, along with David Miles, wanted 75 billion of additional quantitative easing, essentially maintaining the 25 billion a month rate since March.

The majority on the committee, however, wanted a reduced rate of QE, and opted for an additional 50 billion. 25 billion is a lot of money but I don't see this disagreement as an important one of principle. Even 50 billion, after all, was more than the markets had expected. The minutes are here.