has done in the form of a symmetrical 2½ % target for a particular statistical measure of retail prices. so we have “ instrument ” rather than “ goal ” independence. it is sometimes suggested that this is a second best arrangement. in our national context at least i disagree with that view. the precise objective of policy - even within the confines of the concept of price stability - remains a political decision : there will always be those who argue for a somewhat higher or somewhat lower target, and the fact that the government endorses a precise target rather than just the vaguer goal of “ stability ” certainly strengthens our hand by allowing us to concentrate upon our essentially technical task. i am bound to say that in practice it seems to me to be rather a second order issue anyway given the narrowness of the range of definitions of “ stability ” that would carry conviction with the public, including financial markets. the act confers the responsibility for meeting the government ’ s inflation target specifically on a newly created monetary policy committee, comprising myself as chairman, the two deputy governors, two executive directors appointed by the governor after consultation with the chancellor and four members appointed from outside the bank by the chancellor. the governors are appointed as members of the committee for their full five year ( renewable ) terms ; the remaining members are appointed for three year terms which are also renewable. the committee ’ s policy meetings are also attended by a senior treasury official in the capacity of an observer, who may participate in the discussion - essentially to inform the committee of any relevant aspects of the government ’ s wider economic policies and explain the committee ’ s thinking to the chancellor - but he may not express a view on the monetary policy decision or, of course, vote on that decision. one can argue endlessly about the precise composition of the committee, their term of appointment and so on. the key consideration for me is that all nine members need to be genuinely independent, technical experts in the field of monetary policy or a closely related field, not representatives of any particular social or industrial grouping. the objective of policy is appropriately determined by a democratic process ; the committee ’ s job is, as i say, a technical one, which requires relevant technical expertise. the transparency of the committee ’ s decision - making process is assured by continuation of the requirements that we should produce our quarterly inflation report and publish minutes of our monthly meetings, which we have now chosen to do with just a two week delay. transparency is further enhanced by a requirement that the minutes

should record how each individual member of the committee voted on the interest rate decision. as before, it is vital for public confidence in these new arrangements that their intention is not subverted by the evolution of informal conventions - that the integrity of the procedures is respected. in this context we take great pains to ensure that the true nature of the policy debate is reflected in the minutes and that the range of views around our inflation forecast is properly reflected in the inflation report. in fact i think we probably tend to err on the side of drawing too much, rather than too little, attention to differences of opinion within the committee which are often largely a question of nuance. but it is better in my view to err on that side rather than to attempt to submerge the differences. we do not, however, attribute particular views to particular individuals. to do so would invite prepared statements and militate against the inter - active debate which is an outstanding and immensely valuable characteristic of our meetings. it would suppress the kind of “ what if ” discussion in which the same individual may explore alternative views. no attempt is made to concert the outcome of the policy decision ; in fact i go out of my way to discourage any kind of collusion, whether between the internal or external members of the committee - we are, and must remain, nine independent members, individually accountable for our decisions as to how we vote. this, of course, means that the committee is divided as often as not ; but although this initially led to public comment to the effect that the committee did not know what it was doing and could not make up its mind, it is now generally accepted as the natural order of things and helps to underline to the public at large that monetary policy making cannot be a precise science - however much it needs to be informed by all the science available to us. that, in our context, is i think now much easier to understand than a more consensual approach would be, but there was certainly a learning period. it has been suggested to me that the arrangements i have described somehow diminish the position of the governor. well if that ’ s true this governor at least welcomes it! i am sure that all of you are well aware of how finely balanced monetary policy decisions are at the margin, and that all of you have agonised, just as i have, over the right thing to do and the right time to do it. i find the cross - bearings on those