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The transmission of monetary policy

The Monetary Policy Committee

Martin Weale describes the functions of the Bank of England’s Monetary Policy Committee and explains why it is important to have a politically independent body setting the interest rate

Monetary Policy Committee of the Bank of England, inflation targeting, macroprudential regulation

The Bank of England’s Monetary Policy Committee (MPC) sets the bank rate. This is the rate of interest that the Bank of England pays commercial banks on reserves deposited with it. This in turn has a strong influence on borrowing and lending rates throughout the economy. The committee is required by law to use its judgement to set the bank rate at a level which will keep inflation close to its target of 2% per annum.

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India’s sanitation problem

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The transmission of monetary policy

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