Following its latest quarterly meeting (carried out in conjunction with the Sunday Times) the Shadow Monetary Policy Committee (SMPC) voted to leave Bank Rate unchanged on Thursday 7th August. In particular, six members of the shadow committee voted for rates to remain on hold, while three members voted to cut the official interest rate by ¼%.

The bare vote understates the underlying ‘dovishness’ of the shadow committee, however, since all three cutters had a bias towards further reductions, three of the holders had a bias to cut aggressively in future months, and a further holder had a bias to ease. In contrast, only two of the SMPC members who voted to hold Bank Rate on 7th August had a bias to tighten in subsequent months.

The SMPC is a group of independent economists, who assemble quarterly at the Institute of Economic Affairs (IEA) in Westminster to monitor UK monetary policy. The inaugural SMPC meeting was held in July 1997 and the Committee has met regularly since then. That it is the longest established such body in Britain, and that it meets physically to discuss the deeper issues involved, distinguishes the IEA’s SMPC from the similar exercises now carried out by a number of publications.

Summer holidays are here, a good time to reflect on the past and on what is to come. After seven months of being battered by the twin shocks of a global credit crunch and surging oil and commodity prices, should we brace ourselves for an even grimmer autumn and winter?

The fall in the oil price from farcical to merely ridiculous levels, with other commodity prices easing in tandem, is good news, though it needs to drop a lot further to take one of those twin shocks away.

Evidence of an easing of the credit crunch is harder to find, despite slight reductions in mortgage rates, better news from some American banks and signs that predatory buyers are following Santander's example and circling some of Britain's troubled mortgage providers.

This may, however, be just clutching at straws. The record low for new mortgage approvals reported by the British Bankers' Association last month, two-thirds down on a year earlier, shows an unprecedented squeeze on credit availability.

Retailers, if you believe the official figures, have gone from boom to bust in a month, May's record 3.6% surge in sales volume being followed by June's unprecedented 3.9% plunge. The consumer trend, with sales up 0.6% in the second quarter, is plainly slowing. That is also true for the wider economy, which recorded its 64th consecutive quarter of growth in the second quarter, but of a mere 0.2%.

After a rollercoaster week for data, which included a record monthly drop in retail sales (on the back of a record monthly rise), official figures showed a 0.2% rise in gross domestic product for the second quarter. The record run, 64 consecutive quarters of growth, thus continued. Will it do so this quarter? It could be a close-run thing.

Both construction (down 0.7%) and production (down 0.5%) showed declines, so GDP was kept going by the service sector, up 0.4%. Transport, storage and communication rose by 2.2% while business and finance scraped a 0.1% increase. Compared with a year earlier, GDP was up by 1.6%, which is a pretty good indication of 2008's likely growth outturn. More details here.

The two most "academic" members of the Bank of England's monetary policy committee (MPC) were diametrically opposed this month, David "Danny" Blanchflower voting for a quarter-point rate cut and Tim Besley favouring an increase of a similar amount. The other seven members opted for an unchanged 5% Bank rate. Nerves may be set on edge by the MPC's reference to August as the best time to communicate any rate change. The tone of the discussion appears to suggest, however, that the majority of committee members are happy to remain on hold. The minutes are here.

On my bookshelf there is a tome I have been meaning to dip back into for some time. It is called Reforming Britain's Economic and Financial Policy.

Written by Ed Balls, then Treasury chief economic adviser, now in charge of what used to be the education department, and Gus O'Donnell, then head of the government's economic service, now head of the civil service, it was intended to be the bible of new Labour macroeconomic policy.

The foreword was by Gordon Brown, who was inspired by his own achievement. The reforms of 1997 ranked alongside those of the 1940s, he suggested, as he traced the "intellectual journey" to "an institutional framework that commanded market credibility and public trust".

The three pillars of this new framework were an independent Bank of England to deliver low inflation, "a fiscal policy framework which is delivering sound public finances" and a Financial Services Authority to ensure financial stability. The book was sold as suitable for students. Maybe it is now only appropriate for historians, particularly those interested in crumbling pillars.

What should we make of the fiscal policy pillar of which Brown was so proud when Treasury officials are busy working on a rewriting of his rules?

The latest numbers for the public finances make grim reading for the Treasury. Revenues are being hit by the weakening economy, so public sector net borrowing in June was £9.2 billion, compared with £6.3 billion a year earlier. In the April-June period net borrowing was £24.4 billion, up from £14.7 billion in April-June 2007. So a clear worsening, detailed here, at a time when the Financial Times has reported that the Treasury is considering a rewrite of the fiscal rules.

The Treasury has hinted before that the end of the economic cycle would provide an opportunity for reassessing the fiscal rules. But any change in the coming months will smack of political expediency.

The world economy is in a "tough spot" but the International Monetary Fund has revised up its growth numbers marginally. It now expects 4.1% global growth this year, slowing to 3.9% next. Projections for the UK are revised up to 1.8% this year, 1.7% next. Unusual to see anybody revising up growth forecasts these days, though the Fed also did so for the US economy earlier this week. The IMF's update is here.

A 15,500 rise in the claimant count to just over 840,000 last month will grab all the headlines, but the Labour Force Survey measure showed unemployment rising by a modest 12,000 in the March-May period, smaller than the originally estimated 38,000 increase for February-April. Employment was up by 61,000 over the March-May period. The job market is clearly softening, but gradually. Details here.