Guiding consumers since 2009

MPC interest rate meeting begins with Gill Marcus

By Staff Writer
There is a new Guv in town, Gill Marcus, and today she begins her first Monetary Policy Committee meeting as her tenure as The Guv, begins. In her role as the governor of the Reserve Bank she will be mainly responsible for maintaining price stability, which means she will deal with keeping inflation under control. The MPC reports on Tuesday 17th December. So what is the expected outcome?

 

  • Most think no change to interest rate
  • Minority favour 50 basis point cut
  • Any policy changes will take place later

 

The new Guv is just stepping into her tenure and this is little doubt that the current MPC meeting will follow the form of previous meetings. Any changes that may be made to policy are not likely to be effected until next year in 2010. One of the major changes to the MPC was the introduction of monthly meetings this year in response to the financial crisis. This may now revert back to the every second month meeting that was in effect previous to the crisis.

The Reserve Bank has been pursuing a policy of inflation targeting, which has some detractors, but the policy appears to have worked with inflation now only a touch outside of the target band. There appears to be little likelihood of a rate cut coming this month. Inflation targeting via interest rates essentially controls the money supply and takes some time to filter through into the real economy. Marcus has a big role to step into and it will be interesting to see how she does. As usual the announcement will be on webcast.

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