Monetary and fiscal policy : present successes and future problems, 3rd report of session 2003-04, Vol. 1: Report

This is the second report by the Committee on the performance of the Monetary Policy Committee (MPC) of the Bank of England.

Issues discussed include: the MPC's operational target and effects on the control of inflation; the role of housing in the determination of monetary policy; other factors affecting inflation; the MPC's forecasting record; the expertise of recently appointed MPC members; the conduct of fiscal policy, UK fiscal rules, the suitability of the Stability and Growth Pact; and improving the supply side of the economy.

Findings include: concern about the Chancellor's decision to change the MPC's operational target, now based on the Consumer Prices Index; the need for clarification about the MPC's position on house price inflation and the recent rise in oil prices; and concern that the Bank of England's forecasting record reveals systematic and persistent errors as well as some lack of transparency in the basis for the MPC's interest rate decisions.