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19 January 2010

Exclusive — David Blanchflower: “This MPC is not fit for purpose“

"After the election we are going to have to reconsider who sets monetary policy"

By Charlotte Middlehurst

In his economics column for the New Statesman this week, Professor David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee (MPC), says “the MPC’s days are numbered, certainly in terms of its remit and probably its membership. After the election we are going to have to reconsider who sets monetary policy.”

He adds: “The MPC missed the recession entirely . . . The recession was much deeper because of their failure to act. The MPC was asleep at the wheel. Its inability to communicate adequately what quantitative easing is supposed to do suggests it has learned little.”

Blanchflower concludes: “This MPC is not fit for purpose and should be disbanded.”

Professor Blanchflower also criticises his former colleague on the MPC Andrew Sentance, who has warned in recent days that rake hikes might be imminent: “The first rule, for an MPC member, should be to do no harm. He was the one who throughout 2008 denied there was going to be a recession.”

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And he dismisses the decision by the Conservative shadow chancellor, George Osborne, to cut public spending within 50 days of any election, saying: “He seems hell-bent on creating the Osborne Dip.”

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We’ve published the column online this evening (two days ahead of the magazine hitting the newstands), so go read it now.