Coherence vs agreement I believe I have set out so far a reasoned view that the three Bank policy Committees – the MPC, FPC and PRA have a coherent set of objectives, structures, appropriate policy tools and coordination to ensure that there is not any inherent absolute conflict in the framework. And the strategic changes internally at the Bank announced earlier this year could be seen as being a reinforcement to that structure by maximising the synergies across the Bank, including the PRA. But coherence doesn’t always mean agreement. There will no doubt be disagreements at some point. Indeed, the appointment of independent members to the policy committees is intended to ensure challenge and the absence of “group-think”. Dissenting views on the MPC are not only an established part of the culture but actively encouraged by the Treasury Committee in Parliament. The FPC and PRA Board, in contrast, generally work by consensus, although there are provisions for recording dissent and votes if necessary. But disagreements over judgements between individuals are normal – that’s why we have decision making by committee in the first place. What we have not seen is any reason why the structure should be regarded as internally conflicted. How likely is it that there will be dissent across committees? There are mitigants in place to reduce the chances of that.
BIS central bankers’ speeches  11  The future role of the central bank is taking shape Allow me to conclude by highlighting certain aspects that are important to central banks in terms of creating a framework that continues to safeguard stable prices while at the same time being consistent with sustainable development in the financial system. First, monetary policy should continue to be conducted in the framework of flexible inflation target policy, with price stability as the overriding target. However, the financial crisis has brought to light the importance of monetary policy taking greater account of financial stability. It can be a case of extending the time horizon of the monetary policy analysis, and focusing on price stability over a longer period than just the next few years. Second, financial stability policy requires a new focus, and macroprudential policy is emerging as a new policy area. Macroprudential tools provide better opportunities to strengthen the resilience of banks and other financial institutions to various shocks. They also provide better possibilities of influencing bank lending rates and thus macroprudential policy becomes closely interconnected with monetary policy. Overall, this enables us to work to a greater extent towards achieving a sustainable development in both lending and economic development. Having more tools also facilitates managing the conflicting objectives encountered by central banks, even though there will always be difficult trade-offs. So, there is good reason to give central banks an influential role in macroprudential policy.