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Revision as of 21:13, 11 May 2005 by 163.1.159.21 (talk)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)The Monetary Policy Committee (MPC) is a committee of the Bank Of England, which meets every month to decide the official interest rate in the United Kingdom. It comprises:
- The Governor of the Bank
- The two Deputy Governors
- The Bank's Chief Economist
- The Executive Director for Market Operations
- Four external members, appointed by the Chancellor of the Exchequer
Each member has one vote, with the Governor holding the casting vote in event of a tie. Representatives from the Treasury can attend the meeting, but only in a non-voting capacity.
Meetings are held on the Wednesday and Thursday following the first Monday of each month. The interest rate decisions are announced at noon immediately following the Thursday meeting. In each meeting, the committee studies data relating to the UK economy, as well as the worldwide economy, presented by the Bank's economists and regional representatives. Decisions are made with a primary aim of price stability, defined by the government's inflation target, set each year in the Budget (for the 2004-2005 financial year, the target was 2 percent). The secondary aim of the committee is to support the government's economic policies, and targets for growth and employment.
Traditionally, it was the Treasury that set interest rates. The Bank was granted operational responsibility to set rates by Chancellor Gordon Brown on May 6, 1997, and the guidelines for this were formally laid out in the Bank of England Act 1998. The government reserves the right to instruct the Bank on what rate to set in times of emergency.
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