Victory for the doves

THE Bank of England kept interest rates unchanged at 6.0% this week, extending the standstill on rate changes to six months, one of the two longest periods of inactivity since the Bank was made independent in May 1997. The decision came after a series of meetings in which the Monetary Policy Committee (MPC) appeared to have split three ways between the so-called hawks and doves, and a swing group in the centre. Prominent among those pressing for pre-emptive rate increases in the past few months has been Mervyn King, the deputy governor specialising in monetary policy. DeAnne Julius, an external member, is the leading dove on the MPC: she voted against the rate increase in February. Eddie George, the Bank's governor, leads the key group in the centre. At issue in this dispute between the hawks and the doves is whether the shift towards a new economy has undermined the old rules for conducting monetary policy.