BoE’s new MPC member suggests tweaks to policy approach

Michael Saunders. Photo: BoE

The Bank of England's (BoE) newest monetary policy committee (MPC) member suggested during testimony today (October 11) that policy-makers might be better served if they update models for unemployment.

Michael Saunders told the Treasury Committee that the BoE uses a 5% value for equilibrium unemployment in some of its models. The value reflects the pre-2008 level of unemployment that was associated with 2% inflation.

The problem for the MPC is that UK unemployment fell to 4.9% in the second quar