Monetary policy: Difference between revisions

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====UK monetary policy====
==UK monetary policy==


In recent years the primary objectives of UK monetary policy have been 'stable prices' and confidence in the currency, collectively known as 'monetary stability'.
In recent years the primary objectives of UK monetary policy have been 'stable prices' and confidence in the currency, collectively known as 'monetary stability'.


'Stable prices' are defined by the UK government's inflation target, currently 2% per annum as measured by the UK Retail Prices Index (RPI).
'Stable prices' are defined by the UK government's inflation target, currently 2% per annum as measured by the UK Consumer Prices Index (CPI).


The objective is to keep inflation close to the target, neither too high nor too low. If inflation moves away from the target by more than 1% in either direction, additional corrective actions will be taken.


Responsibility for setting monetary policy - to achieve monetary stability - rests with the Bank of England's Monetary Policy Committee (MPC).


Subject to the primacy of the inflation target, the secondary objectives of monetary policy in the UK are to support the government's other economic objectives, including those for growth and employment.


Monetary policy in the UK has usually operated through setting the Bank of England's interest rate, the Official Bank Rate, or 'Bank Rate'.


This rate is often referred to as the 'Bank of England Base Rate'.
Responsibility for setting UK monetary policy - to achieve monetary stability - lies with the Bank of England's Monetary Policy Committee (MPC).




====Quantitative easing in the UK ====
Monetary policy in the UK has usually operated through setting the Bank of England's interest rate, the Official Bank Rate, or 'Bank Rate'.
 
In 2009, in addition to setting Bank Rate, the MPC started quantitative easing (QE).


This means injecting money directly into the economy by purchasing financial assets.
The Official Bank Rate is sometimes referred to as the 'Bank of England Base Rate'.
 
QE is designed to stimulate the economy further, beyond what could be achieved by low interest rates alone.




== See also ==
== See also ==
* [[Bank of England]]
* [[Bank of England]]
* [[Bank Rate]]
* [[Confidence]]
* [[Consumer Prices Index]]
* [[Debasement]]
* [[Deflation]]
* [[Depression]]
* [[Digital public money]]
* [[Discount rate]]
* [[Discount rate]]
* [[Dovish]]
* [[Effective lower bound]]
* [[Financial Policy Committee]]
* [[Financial Policy Committee]]
* [[Financial stability]]
* [[Fiscal policy]]
* [[Fiscal policy]]
* [[Hawkish]]
* [[Inflation]]
* [[Inflation target]]
* [[Interest rate]]
* [[Interest rate]]
* [[Keynesianism]]
* [[Keynesianism]]
* [[Lowflation]]
* [[Monetary]]
* [[Monetary]]
* [[Monetary Policy Committee]]
* [[Monetary Policy Committee]]
* [[Money supply]]
* [[Money supply]]
* [[Official Bank Rate]]
* [[Open market operations]]
* [[Open market operations]]
* [[Quantitative easing ]]
* [[Overheating]]
* [[Quantitative easing ]]  (QE)
* [[Quantitative tightening]]  (QT)
* [[Recession]]
* [[Reserve requirements]]
* [[Reserve requirements]]
* [[Retail Prices Index]]
* [[Sterling Monetary Framework]]
* [[Supply side policy]]
* [[Supply side policy]]
* [[Tight]]
* [[Tightening]]
* [[Unconventional monetary policy]]
* [[Zero lower bound]]
* [[ZLB problem]]
* [[ZLB problem]]
==Other resource==
*[https://www.bankofengland.co.uk/monetary-policy/ UK monetary policy - Bank of England]
[[Category:The_business_context]]

Latest revision as of 21:12, 11 May 2024

Monetary policy is central government or other policy to stimulate or otherwise influence economic activity by influencing money supply or interest rates.

Historically, mechanisms for influencing the money supply have included the use of open market operations, quantitative easing, the central bank discount rate and reserve requirements.


UK monetary policy

In recent years the primary objectives of UK monetary policy have been 'stable prices' and confidence in the currency, collectively known as 'monetary stability'.

'Stable prices' are defined by the UK government's inflation target, currently 2% per annum as measured by the UK Consumer Prices Index (CPI).

The objective is to keep inflation close to the target, neither too high nor too low. If inflation moves away from the target by more than 1% in either direction, additional corrective actions will be taken.


Subject to the primacy of the inflation target, the secondary objectives of monetary policy in the UK are to support the government's other economic objectives, including those for growth and employment.


Responsibility for setting UK monetary policy - to achieve monetary stability - lies with the Bank of England's Monetary Policy Committee (MPC).


Monetary policy in the UK has usually operated through setting the Bank of England's interest rate, the Official Bank Rate, or 'Bank Rate'.

The Official Bank Rate is sometimes referred to as the 'Bank of England Base Rate'.


See also


Other resource