This would never happen at the Fed

The minutes of the Bank of England's June 6th-7th monetary policy meeting were released earlier today and it was revealed that Governor Mervyn King was outvoted 5-to-4 in his bid to raise interest rates another quarter point.

This comes amid rising inflation in the U.K. and increasing discussion in the mainstream media about how the government's statistics understate the rising cost of living for various groups, particularly pensioners (retirees).

Bloomberg reports:

Five of the Monetary Policy Committee's nine members overruled King with an unexpectedly slim majority, marking the second time in four years he has been outvoted as governor. King argued an increase was needed because of ``upside'' inflation risks, minutes of the June 6-7 meeting showed today.

The pound rose and investors raised bets on another rate increase after the publication of the vote, which wasn't predicted by any of the 26 economists in a Bloomberg News survey. King said last week that the bank ``may need to take further action,'' on inflation, which has exceeded the Bank of England's 2 percent target for the past 13 months.

Two percent. Ha!

How does London become the world's second most expensive city when inflation is running at just over the two percent target?

Only an economist could rationalize something like this.

Dissent in the Ranks

When it comes to casting votes on monetary policy decisions, it is interesting to note the contrast in voting patterns on either side of the Atlantic.

While this was the second time in four years that the central bank chief was outvoted, it may come as a surprise to learn that here in the U.S. there have been a total of only five dissenting votes since the Federal Reserve began releasing the roll call of votes back in 2002.

Monetary policy decisions have been unanimous for all but five meetings since 2002 and four of those split decisions were a result of Virginia Fed Governor Jeffrey Lacker voting for another quarter-point rate hike in the second half of last year.

As can be easily verified at the Fed's website, there was only one dissenting vote in the last four years of Alan Greenspan's term as Fed chief. This came in September of 2005 when Mark Olsen voted for "no-change" about mid-way through the 2004-2006 "baby-step" campaign to normalize interest rates.

In his later years, the former Fed chief was known to squash discussion at FOMC meetings, purportedly knowing before the meeting began that the vote would be unanimous (except for that one time).

What is it they say when everyone thinks alike?

No one is thinking that much?