If interest rates increase the marginal propensity to save increases, so the multiplier effect becomes weaker, so changes in I and C have less effect on Y
The Bank of England's Monetary Policy Committee (MPC) now sets monetary policy to meet the symmetrical 2% inflation target, and in a way that helps to sustain growth and employment
There are 9 members of the Monetary Policy Committee
Critics have suggested that the MPCs success at keeping down inflation in the noughties was more down to globalisation keeping costs down rather then the impact of their actions
Hawks want to keep pressure up on controlling inflation by raising interest rates if necessary
Doves don't rush to raise interest rates so that there isn't any downward pressures on demand and unemployment
Monetary policy involves controlling the growth of the money supply in order to control inflation
