mpc.theyserveforyou.com

mpc: 7 the inflation measure was not specified, this might be no more than a reflection of the widely-expected rise in the RPI measure of inflation, which included mortgage interest payments.

Other considerations

25 The Committee discussed whether the change of millennium had given rise to problems of data interpretation, over and above the normal difficulties in identifying underlying developments over the Christmas and New Year period. 26 At its previous meeting, the Committee had reaffirmed that there was no reason for the Y2K period to constrain monetary policy setting in the UK, and had also noted that it was unclear whether any `fog' around the year-end would be much thicker than usual. So far any Y2K uncertainties had indeed appeared to be rather limited. While some figures had clearly been affected, such as the narrow money data, adjustments could be made to take account of the distortions. The pattern of retail sales was not yet clear, but this was typical at this time of year. The prospect of the new millennium might have had some impact on investment, for instance in IT, though this remained unclear. That said, many of the backward-looking data were still for periods before the turn of the year, so further distortions in the data might perhaps be expected. 27 The Committee also noted that during the next month it would carry out a new quarterly forecast for the February Inflation Report. This would allow it to analyse some of the puzzles in the data in more detail, such as the continuing coexistence of relatively subdued retail price inflation, above-trend growth in demand, and a pick-up in earnings growth and commodity prices. To the extent that uncertainties surrounding some of these issues might soon diminish in a way which informed the policy decision, there was a case for waiting until this had been done. But to the extent that the news since the previous meeting warranted an increase in rates, there was no reason for a delay, and some members of the Committee had felt that a rise in rates had been needed already in December.

The immediate policy decision

28 The external environment for the UK had strengthened over the past month, as had most of the determinants of domestic demand, including wealth, labour income and household borrowing.