Monetary policy and Monetisation: Difference between pages

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imported>Doug Williamson
(Expand. Source: Bank of England webpage http://www.bankofengland.co.uk/monetarypolicy/Pages/framework/framework.aspx)
 
imported>Doug Williamson
m (Spacing 22/8/13)
 
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Monetary policy is central government or other policy to stimulate or otherwise influence economic activity by influencing money supply or interest rates.  
1.  


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.
Conversion into money, in the form of the promissory notes or coin issued by a central bank.




====UK monetary policy====
2.


In recent years the primary objectives of UK monetary policy have been 'stable prices' and confidence in the currency, collectively known as 'monetary stability'.
More generally, the use or exploitation of other assets - including information - for financial gain.


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


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 measure will be taken.
(Also written 'monetization'.)
 
 
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'.
 
 
====Quantitative easing in the UK ====
 
In 2009, in addition to setting Official Bank Rate, the MPC started quantitative easing (QE).
 
This means injecting money directly into the economy by purchasing financial assets.
 
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]]
* [[Monetise]]
* [[Deflation]]
* [[Money]]
* [[Discount rate]]
* [[Promissory note]]
* [[Financial Policy Committee]]
* [[Fiscal policy]]
* [[Inflation]]
* [[Interest rate]]
* [[Keynesianism]]
* [[Monetary]]
* [[Monetary Policy Committee]]
* [[Money supply]]
* [[Open market operations]]
* [[Quantitative easing ]]
* [[Reserve requirements]]
* [[Retail Prices Index]]
* [[Supply side policy]]
* [[ZLB problem]]

Revision as of 08:43, 22 August 2013

1.

Conversion into money, in the form of the promissory notes or coin issued by a central bank.


2.

More generally, the use or exploitation of other assets - including information - for financial gain.


(Also written 'monetization'.)


See also