A deputy governor at the Bank of England hit back at the claim that the Bank’s rate-setting committee suffers from ‘groupthink’, describing the allegation as “absolute tripe”.
In an interview with the Times, Ben Broadbent said “when you sit [on the Monetary Policy Committee (MPC)], you realise pretty quickly there is robust discussion about every single question”.
Broadbent argued that many of those accusing the Bank of ‘groupthink’ displayed their own herd mentality. “It is something that people trot out,” he said. “I dismiss the charge pretty strongly”.
The ‘groupthink’ accusation has been levelled by a number of economists and former Bank officials, including former Governor Lord Mervyn King and former Deputy Governor Charlie Bean.
In a recent debate in the House of Lords, Lord King said the MPC suffered from a “lack of intellectual diversity,” an argument Broadbent rejected.
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“I share an identical background and education to [King] and I think differently to him on some things, including on this point,” he said.
The MPC has not had a unanimous vote since September 2021. At the most recent meeting earlier this month, two members voted to cut rates while seven thought rates should be left on hold.
As recently as February this year the Bank of England was split three ways on the appropriate course of action.
Broadbent admitted that policymakers at the Bank of England misjudged the inflationary of the pandemic, suggesting the pandemic revealed “the limits of normal macroeconomics”.
“It is quite something to see economies shrink by 20 per cent in most countries and then also to have inflation,” he said. A big economic contraction usually makes deflation a more pressing concern for policymakers.
Broadbent will take part in his last MPC meeting on 20 June, having been on the body for over a decade.
Although inflation is coming back down to target, having fallen to its lowest level in nearly three years last week, he suggested that interest rates might have to be left on hold for a little while longer.
“Its important to understand that one of the reasons that inflation has come off is because we’ve got restrictive policy. The fact that you might need to anticipate the need for rate cuts in the future does not mean they need to be made right now,” he said.