Monetary Policy Setting in Australia, Canada and the Euro Area: Insights from the Shadows

Abstract

Voting by shadow monetary policy committees (SMPCs) provide hints about monetary policy decisions. We examine data for Australia, Canada and the euro area. SMPCs release individual members’ recommendations. Their central banks do not. How much variation is there in preferences towards inflation and output gaps? Do committees tend towards less extreme policy choices than individuals? We find little heterogeneity in preferences among committee members in Australia and Canada, but not for the shadow committee in the euro area. Our results may be relevant in understanding how the composition, structure and operation of committees in these economies impact monetary policy decisions.