Monetary policy news and market reaction to the Inflation Report and MPC Minutes

Quarterly Bulletin 2005 Q2
Published on 20 June 2005

By James Bell of the Bank’s Conjunctural Assessment and Projections Division and Rob in Windle of the Bank’s Sterling Markets Division.

This article describes the results of analysis carried out as background for the speech ‘Inflation targeting in practice: models, forecasts and hunches’, by Rachel Lomax, Deputy Governor for Monetary Policy, which is reproduced in this edition of the Quarterly Bulletin. It examines the reactions of both economists and financial markets to different MPC announcements: the policy statement release immediately after the interest rate meeting; the Minutes of that meeting; and the Inflation Report. This article also examines whether the amount of perceived ‘news’ contained in interest rate decisions has changed since the MPC was established in 1997.

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