Over 60% of respondents thought that the balance of MPC communication was “about right”, although around 20% felt that too much commentary was devoted to the central view of prospects rather than to the balance of risks. Given the emphasis which the MPC places on the fan chart as a means of conveying information about forecasts, it is striking that there is a demand for even more information about the risks surrounding the central projection rather than the central projection itself. There is, perhaps, a lesson here in the need to redress the balance of discussion in the Inflation Report towards the risks and away from the central projection. The view of respondents – largely City economists – in this respect seems to me entirely rational, but in marked contrast to the pressure on us from the press. Some of the words of respondents to the survey convey the flavour of their views. Several commented on the benefits of more information about the range of views on the Committee. For example, “MPC members could do more speeches, interviews and meetings to explain their individual views on the macroeconomic outlook”. And “the key difficulty in framing the communications is that they are clearly meant to convey the views of a group of people rather than one individual.
In a speech on economic prospects in July 1957, the former Chancellor of the Exchequer, who had recently become Prime Minister after the resignation of his predecessor following an unsuccessful military excursion in the Middle East, said: “Indeed, let us be frank about it: most of our people have never had it so good. Go around the country, go to the industrial towns, go to the farms, and you will see a state of prosperity such as we have never had in my lifetime – nor indeed ever in the history of this country. What is beginning to worry some of us is, is it too good to be true? – or perhaps I should say, is it too good to last? … Our constant concern today is, can prices be steadied while at the same time we maintain full employment in an expanding economy? Can we control inflation? This is the 3 problem of our time”. Some of you may think that it is the problem of our time too. CPI inflation has now risen above 3%, the highest rate since the MPC was set up. Although I believe we are better equipped to maintain stability now than fifty years ago, largely because we have a monetary framework based on an inflation target and clearly defined responsibilities for the Bank of England, we should perhaps look in more detail at how the MPC has worked before coming to a final judgement on the likelihood of continued success.