Why don’t central bankers disagree?

An interesting piece by Richard Barwell who is a Senior Economist at BNP Paribas

He says though there is a lot of discussion on dissent in central bank monetary policy meetings, it does not mean much. It is just talk with very little action:

If the acid test of dissent within a policy committee is how people vote – rather than how they talk – then to paraphrase Lord King, all the MPC ever does is consensus. The hawks and doves are birds of a feather: they agree, all the time.  In this column, we have focused on the MPC during the Great Moderation, but the point applies more broadly.  For example, it is interesting that there is far more dissent within the FOMC over the near-term path of interest rates (e.g. ‘the 2017 dot’) than over the current level of interest rates.

Likewise, if one looks at the pattern of votes during some of the most high profile episodes of dissent within central banks that have fascinated the media and markets alike – such as ‘Svensson versus the Riksbank’ in 2010/11 or ‘Blanchflower versus the Bank of England’ in 2008 – we see the same mismatch: material differences in views but marginal differences in votes. Whether this state of affairs is optimal is debatable.  A case can be made that the quality of the internal policy debate and the external communication strategy would benefit from policymakers providing a frank assessment of the appropriate monetary stance alongside their assessment of the economy. What cannot be disputed is that either policymakers essentially agree all the time or they do not vote their view.

One has always believed much of this MPC design, communications etc is a bell and whistle thing which is mostly noise..

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