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Growth and deevelopment in the Harrod-Domar model

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The monetary transmission mechanism

Since 1997, the Bank of England has had the responsibility of meeting the government’s target for inflation. How do actions taken by the bank affect the ‘real’ economy? Eric Pentecost explains

Figure 1 The transmission mechanism of monetary policy

monetary policy, monetary transmission mechanism, quantitative easing

The Bank of England’s Monetary Policy Committee (MPC) meets every month to set the bank rate — the interest rate paid on cash reserves held at the Bank of England by the commercial banks. The MPC sets the bank rate to try to meet the government’s inflation target of 2% per annum.

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Previous

Growth and deevelopment in the Harrod-Domar model

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The national living wage: economic consequences

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