It recommended a fixed timetable for meetings between Chancellor and Governor and for the announcement of decisions on interest rates. Many of the recommendations were carried over to the independent MPC that followed. The optimal time for meetings was thought to be the end of the first week of the month, and with minor changes the timetable of a two-day meeting culminating with an immediate announcement of the decision at noon on Thursday was adopted within a couple of weeks. The key difference was that a purely advisory committee would not have published minutes of its own deliberations – only the minutes of the meetings between the Chancellor and Governor would have been made public – and voting was not an agreed feature of such a committee. My predecessor – Eddie George – was informed of the new and enhanced role for the Bank early on the morning prior to the announcement – a Bank Holiday Monday. Returning from the tennis court, I received a call from Eddie asking me to meet him in the Bank as soon as possible. That was the last I saw of the sun for quite a time. We sat in his office with a sense of excitement that now we really did have a chance to show what the Bank of England and price stability could do for this country.
Such was the adrenalin flow that at one rehearsal a row broke out about how a decision would be reached if the Committee split three-ways in equal numbers. Needless to say, such an eventuality has not occurred.1 But all was resolved and the show opened on Wednesday 4 June. At that first meeting the MPC raised interest rates by 25 basis points, as it did at its two subsequent meetings. A decade is a long time for any show to run. How has it fared? On the face of it UK macroeconomic performance has improved with the creation of the new monetary framework. The MPC arrived on the scene midway through what I have described as the nice (non-inflationary consistently expansionary) decade, and continued into the not-so-bad decade.2 Since the MPC was set up economic growth has averaged 2.8% a year – a little above the post-war average rate – and there has not been a single quarter of negative growth. The average deviation of inflation from target has been just minus 0.08 percentage points. Let me stress that the Committee does not dwell on the past. But an important question for all of us is whether our new found stability will persist. That is not a new question. On the tenth anniversary of the MPC we should remember that this is also the fiftieth anniversary of Harold Macmillan’s famous claim that we had “never had it so good”. But let me remind you too of the full text of his remarks.