The Uk Central Bank - 1330 Words

Summary It is known that the UK central bank has given more attention toward inflation rate than unemployment rate. Due to the recession in year 2008, the quantitative easing has been implemented and both inflation and unemployment rates target have been achieved. Recently, the Monetary Policy Committee (MPC) has voted to maintain the interest rate at 0.5% to attain price stability and to focus on maintaining inflation rather than unemployment. Contradictory, this has subsequently led to a downward trend of the unemployment rate. The unemployment rate is not too high compared to other countries but they are still an issue that needs to be acknowledge. The government may tackle the issue by adjusting the target for inflation and unemployment that will bring UK economy to its full potential. Introduction After the economic recession in 2008, the Bank of England(BoE)’s MPC had chosen to practice quantitative easing (QE) in March 2009 which is lowering the bank rate to 0.5%. This form of monetary policy is chosen as the solution by aiming price stability, economic growth and reach the inflation target of 2% (Bank of England). According to the Office for National Statistics (ONS), UK’s current inflation rate, Consumer Prices Index (CPI) stands at -0.1% as at September 2015 and the unemployment rate has decreased by 0.3% from (April-June 2015) to 5.3% (July-September 2015) while the employment rate, for those working at the age from 16 and 64 was 73.7% for July to SeptemberShow MoreRelatedModels of Determination of Interest Rates Essay1634 Words   |  7 Pagesgreat impact on different areas in the economy and it is crucial to understand what determines it and how it would affect the world. This paper presents a general analysis of models of determinations s of interest rate, which are relevant to the UK economy. Thereafter, the effects of changes in IR to the economy growth will be examined. 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