The Economist has a great
post up today on a key difference between the UK and US central banks: in
the UK, it’s perfectly fine for the governor of the Bank of England to be in
the minority when a vote is taken on interest rates. In the US, if the chairman
of the Federal Reserve ever found himself voting in the minority, it’s expected
that he would resign.
"Losing occasionally doesn’t do the governor’s credibility
any harm," notes the blog. "In fact, it may do the opposite."
So why the need for the Fed chairman always to be in the majority? I can’t think
of a single good reason, and in fact I’m having difficulty even coming up with
bad reasons. Can someone explain the US system to me?