Discuss how the Bank of England can control the money supply and interest rates and then reflect on the above actions taken? Discuss briefly how do interest rates affect the economy The following was released by the Bank of England reflecting on monetary policy on 17" oT sept2020te Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2%Innation target, and in a way that helps to sustain growth and employment. In that context, itschallenge at presentis to respond to the economic and financial impact of the Covid-19 pandemic.At its meetingending on 16 September 2020, the MPC voted unanimously to maintain Bank Rate at0.1%. The Committee voted unanimously for the Bank of England to continue with its existingprogrammes of UK government bond and sterling non-financial investment-grade corporate bondpurchases, financed by the issuance of central bank reserves, maintaining the target for the totalstock of these purchases at £745 billion.boopThe outlook for the economy remains unusually uncertain. The MPC's central projections in theAugust Monetary Policy Report assumed that the direct impact of Covid-19 on the economy woulddissipate gradually. They were also conditioned on the assumption of an immediate, orderly moveto a comprehensive free trade agreement with the European Union on 1 January 2021. Conditionalon those assumptions, UK GDP was projected to continue to recover. Activity was also supportedby substantial fiscal and monetary policy actions. Nonetheless, the recovery in demand took timeas health concerns were expected to drag on activity. The unemployment rate was projected to risemarkedly, consistent with a material degree of spare capacity, before declining gradually.Conditioned on prevailing market yields, CPI inflation was expected to be around 2% in two yearstime.Indicators of global activity have been broadly in line with the Committee's expectations at the timeof the August MPC meeting. The sterling exchange rate index has fallen by around 2%, in partreflecting recent Brexit developments.

The Bank of England has the capacity to control the money supply of money in the economy by either…

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Discuss how the Bank of England can control the money supply and interest rates and then reflect on the above actions taken? Discuss briefly how do interest rates affect the economy

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Discuss how the Bank of England can control the money supply and interest rates and then reflect on the above actions taken?

Discuss briefly how do interest rates affect the economy

The following was released by the Bank of England reflecting on monetary policy on 17" oT sept
2020
te Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2%
Innation target, and in a way that helps to sustain growth and employment. In that context, its
challenge at presentis to respond to the economic and financial impact of the Covid-19 pandemic.
At its meetingending on 16 September 2020, the MPC voted unanimously to maintain Bank Rate at
0.1%. The Committee voted unanimously for the Bank of England to continue with its existing
programmes of UK government bond and sterling non-financial investment-grade corporate bond
purchases, financed by the issuance of central bank reserves, maintaining the target for the total
stock of these purchases at £745 billion.
boop
The outlook for the economy remains unusually uncertain. The MPC's central projections in the
August Monetary Policy Report assumed that the direct impact of Covid-19 on the economy would
dissipate gradually. They were also conditioned on the assumption of an immediate, orderly move
to a comprehensive free trade agreement with the European Union on 1 January 2021. Conditional
on those assumptions, UK GDP was projected to continue to recover. Activity was also supported
by substantial fiscal and monetary policy actions. Nonetheless, the recovery in demand took time
as health concerns were expected to drag on activity. The unemployment rate was projected to rise
markedly, consistent with a material degree of spare capacity, before declining gradually.
Conditioned on prevailing market yields, CPI inflation was expected to be around 2% in two years
time.
Indicators of global activity have been broadly in line with the Committee's expectations at the time
of the August MPC meeting. The sterling exchange rate index has fallen by around 2%, in part
reflecting recent Brexit developments.

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