monetary

• what 3 things are included in monetary policy

  -interest rates

  -controlling the money supply

  -altering the exchange rate
• what is the monetary policy committee

  a part of the bank of England's who are given the responsibility of meeting the 2% CPI target
• why is the MPC Independent

  until 1997 it wasn't but independence means it is not affected by political motives
• how are interest rates normally adjusted

  little by little as the committee meets frequently so they can change then observe the effects
• what does the MPC consider when setting the interest rates

  -current rate of inflation

  -trend of inflation

  -causes of inflation

  -unemployment and economic growth
• how can the causes of inflation affect the interest rates 


  if the inflation is demand pull then then the interest rate change could be affective however if its cost push due to commodity prices it may have little effect
• how does economic growth and unemployment affect the interest rates

  if growth becomes unsuitable or unemployment becomes to high they may alter the rate regardless of inflation
• what is the MPC aim

  2% CPI in the long term