BoE's King tells FT secret of good monetary policy

LONDON, May 3 (Reuters) - Good monetary policy is achieved by thinking what the economics are of any shocks affecting the economy, Bank of England Governor Mervyn King told the Financial Times in an interview published on Thursday.

He also trumpeted the unique fact that the nine members of the Bank's Monetary Policy Committee (MPC) are held individually accountable for their votes through a one-person, one-vote system, the newspaper reported.

Ten years after the central bank achieved independence, King said: "The secret of good policy is to try to think through what are the economics of the shocks hitting the economy at present.

"That in a nutshell is my philosophy of how you should do policy. Don't rely on regressions from the past."

He regarded one of the Bank's key success stories over the past decade as quickly realising the scale and significance of migrant labour from Eastern Europe following the enlargement of the European Union in 2004, according to the FT.

"It's our equivalent of (former U.S. Federal Reserve chairman) Alan Greenspan (realising) the faster growth of output in the late 1990s was the result of faster productivity growth.

"That was an absolutely correct judgment at the time, and that's what we have to do with every variable that we look at, work out why it's growing faster or slower than it was before, and not to use some rather mindless regression."

Turning to the one-person, one-vote accountability system for MPC members, King said he had talked about it to Ed Balls, now the Treasury minister, before the 1997 general election that brought Prime Minister Tony Blair to power.

"I think it was seen as absolutely crucial to the way the committee was to operate if you were to get good decisions," King said.