Monetary Policy Committee

In almost his first action as Chancellor of the Exchequer in May 1997, Gordon Brown unveiled "the most radical reform of the Bank of England since it was established in 1694" by setting up a Monetary Policy Committee to decide the level of interest rates .

The government no longer has any direct say on interest rates but still sets inflation targets. The Bank of England must then set interest rates at a level consistent with achieving those targets.

It does so through the Monetary Policy Committee which consists of nine members, including among others, the Bank of England Governor, the Deputy Governor and four "recognised experts" from outside the bank.

The committee meets monthly, discusses and votes on whether to raise interest rates. The minutes of the meetings are subsequently published. These minutes can be found on the Bank's website .

The committee replaces the monthly meetings between the Chancellor and the Bank Governor which had been taking place under the previous Conservative government.

Last Updated: July 2007 © Moneyextra.com

Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.