Knowledge (XXG)

Monetary Policy Committee (United Kingdom)

Source πŸ“

503:, as well as the worldwide economy, presented by the Bank's economists and regional representatives, and topics for discussion are identified and addressed. The second day consists of a main policy discussion during which MPC members explain their personal views and debate the correct course of action. The Governor chooses the policy most likely to command a majority and, on the third day of the meeting, a vote is taken; each member gets one vote. Those in the minority are asked to give the action they would have preferred. The committee's decisions are announced at noon the day after the meeting has concluded. Following a procedural change in 2015, minutes of each meeting (including the policy preference of each member) are published on the Bank's website at the same time as any decision is announced, resulting in a "Super Thursday" effect. Prior to August 2015, the committee's decisions were published at noon on the final day of the meeting, but there was a two-week delay before any minutes were published. Starting with the March 2015 meeting, full transcripts of meetings will also be published, albeit after an eight-year delay. 241: 379:. Guidelines for the creation of a new "Monetary Policy Committee" were laid out in the Bank of England Act 1998. The Act also set out the responsibilities of the MPC: it would meet monthly; its membership comprise the Governor, two Deputy Governors, two of the Bank's Executive Directors and four members appointed by the Chancellor. It should publish minutes of all meetings within six weeks (in October 1998 the committee announced plans to publish far more quickly, after only one). The Act gave the government responsibility for specifying its price stability target and growth and employment objectives at least annually. The original inflation target the government set for the MPC was 2.5% per year on the 411:, initially injecting Β£75 billion into the economy. By March 2010, it had also increased the amount of money set aside for quantitative easing to Β£200 billion, a figure later increased by a further Β£75 billion in the months following October 2011. The MPC announced two further Β£50 billion rounds of quantitative easing in February and July 2012, bringing the total to Β£375 billion whilst simultaneously keeping the base rate at 0.5%. In March 2013, the Chancellor of the Exchequer, George Osborne, called on the MPC to follow its American counterpart (the 40: 188: 407:), was obliged to write the first MPC open letter to the chancellor (Gordon Brown), explaining why the inflation had deviated from the target of 2% per year by more than one percentage point (3.1%). By February 2013, he had had to write 14 such letters to chancellors. Between October 2008 and March 2009 the base rate was cut six times to an all-time low of 0.5% in order to avoid deflation and spur growth. In March 2009, the MPC launched a programme of 175:, and officially given operational responsibility for setting interest rates in the Bank of England Act 1998, the committee was designed to be independent of political interference and thus to add credibility to interest rate decisions. Each member has one vote, for which they are held to account: full minutes of each meeting are published alongside the committee's monetary policy decisions, and members are regularly called before the 1929: 3458: 3468: 834:, the Bank of England's then Governor, was the only MPC member to have taken part in every meeting since 1997. As a result, after the MPC meeting in July 2013, the first after King retired, no single member had attended every meeting. As of 2016, Kate Barker is the only external member to date to have been appointed for three terms, each lasting three years. 496:, meetings were generally held monthly on the Wednesday and Thursday following the first Monday of the month, although this was sometimes deviated from. In 2010, for example, the meeting was postponed from the 5/6 to the 7/10 May in order to avoid conflicting with the general election scheduled for the 6th. The May 2015 meeting was similarly delayed. 259:
to appointments to the governing body of a designated agency under the Financial Services Act 1986; to amend Schedule 5 to that Act; to make provision relating to the registration of Government stocks and bonds; to make provision about the application of section 207 of the Companies Act 1989 to bearer securities; and for connected purposes.
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An Act to make provision about the constitution, regulation, financial arrangements and functions of the Bank of England, including provision for the transfer of supervisory functions; to amend the Banking Act 1987 in relation to the provision and disclosure of information; to make provision relating
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to answer questions regarding their decisions, via parliamentary committee meetings, often those of the Treasury Committee. MPC members also speak to audiences throughout the country, with the same aim. Their views and expectations for inflation are also republished in the Bank's quarterly inflation
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Criticism of the MPC has centred on its predominant focus on inflation to the detriment of growth and employment, although that criticism may have been mitigated by the March 2013 revisions to the committee's remit. There have also been complaints about the reluctance of lenders to pass on rate
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in financial markets. The committee had already started to cut rates the previous autumn, but the effect of such changes can take up to two years and rates cannot go below zero. By March 2009, faced with very low levels on inflation and interest rates already at 0.5%, the MPC voted to start the
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if inflation exceeds the target by more than one percentage point in either direction, and once every three months thereafter until prices are back within the allowed range. It should also set out what plans the Bank has for rectifying the problem, and how long it is expected to remain at those
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as of 2016). The target takes the form of a "point", rather than the "band" used by the Treasury prior to 1997. The secondary aim of the committee is to support the government's economic policies, and help it meet its targets for growth and employment. That secondary aim was reinforced by then
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noted that the MPC's independence of government "has reduced the scope for short-term political considerations to enter into the determination of interest rates". The creation of the MPC, it said, brought with it "an immediate credibility gain". During this time, the MPC kept interest rates
351:), along with a smaller amount of high-quality debt issued by private companies. Although non-gilts initially made up a non-negligible part of the APF portfolio, as of May 2015 the entirety of the APF was held as gilts. On 7 August 2013, Governor Mark Carney issued the committee's first 390:
The years 1998 to 2006 witnessed an unprecedented period of price stability – during which inflation stayed within a percentage point of the target – despite earlier predictions that it could sit outside the range forty or more per cent of the time. A 2007 report produced for the
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These measures eventually proved insufficient to avoid deflation. Having taken over in August 2013, Governor Mark Carney wrote his first open letter in February 2015 to explain why inflation had fallen below 1% for the first time in the MPC's history. This was followed by
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set interest rates. After reforms in 1992, officials held regular meetings and published minutes, but were not independent of government. The result was a feeling that political factors were clouding what should be purely economic judgements on monetary policy.
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Chancellor of the Exchequer George Osborne in his March 2013 budget, with the MPC given more discretion to more openly "trade off" above-rate inflation in the medium run to boost other economic indicators. The MPC is not responsible for
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in June 2016, the MPC cut the base rate from 0.5% to 0.25%, the first change since March 2009. At the same time, it announced a further round of quantitative easing, valued at Β£60 billion, bringing the total to Β£435 billion.
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Each member has one vote of equal weight, for which they can be held publicly accountable. The Governor chairs the meeting and is the last to cast a vote, acting as a casting vote in event of a tie. Representatives from the
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of 0.1% in April 2015, the first month of negative CPI growth since the 1960s, and triggering a second letter. As of February 2015, Carney has written five such letters. Following the UK's
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The committee is responsible for formulating the United Kingdom's monetary policy, most commonly via the setting of the rate at it which it lends to banks (officially the
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close to a target set by the government, currently 2% per year (as of 2019). Its secondary aim – to support growth and employment – was reinforced in March 2013.
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On 6 May 1997, operational responsibility to set interest rates was granted to the independent Bank of England by the Chancellor of the Exchequer,
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The Monetary Policy Committee of the Bank of England: re-appointment hearing for Ms Kate Barker and Mr Charlie Bean (volume 2)
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changes, and about the extent to which the introduction and management of QE have risked politicising the committee.
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Committee of the Bank of England that decides the United Kingdom's official interest rate
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The dates listed show when their current terms of appointment are due to, or did, end.
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aimed at improving the transparency of the committee's decision making processes.
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ended this period of stability, and, on 16 April 2007, the governor (at that time
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or BOEBR for short). As laid out in law, decisions are made with a primary aim of
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In December 2014, the Bank adopted the recommendations of a report prepared by
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as in force today (including any amendments) within the United Kingdom, from
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On the first day of the three, the Committee studies data relating to the
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The MPC meets eight times a year, including four joint meetings with the
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Following a reshuffle in April 2014, the committee currently comprises:
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It is also responsible for directing other aspects of the government's
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Other, former members of the committee by date of appointment are:
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The MPC are asked to keep the Consumer Price Index at 2% per year.
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for Monetary Policy, Financial Stability and Markets and Banking
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A comparison of the MPC and its counterparts in other countries
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Outside of meetings, members of the MPC can be called upon by
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measure of inflation, but in 2003 this was changed to 2% on
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may attend the meeting, but only as non-voting observers.
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Announced on 6 May 1997, only five days after that year's
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Parkin, Michael; Powell, Melanie; Matthews, Kent (2007).
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As of February 2024, the current Committee comprises:
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Under the Bank of England Act 1998 (c. 11) the Bank's
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The Committee comprises nine members, including the 1705:"Bank of England shake-up aims to boost transparency" 563:(1 September 2021 - 31 August 2024, external member) 557:(1 September 2018 - 31 August 2024, external member) 3387: 3204: 3103: 2968: 2961: 2877: 2807: 2734: 2709: 2557: 2546: 2491: 2358: 2349: 2228: 2182: 1936: 1876: 1417:"Bank of England injects Β£50bn into ailing economy" 308: 301: 291: 281: 276: 263: 252: 226: 105: 95: 85: 68: 57: 49: 1271:"Bank of England Statistical Interactive Database" 883: 881: 879: 877: 875: 355:as a third tool for controlling future inflation. 3152:Glasgow International Financial Services District 1470:Szu Ping Chan; Denise Roland (12 February 2015). 1117:"UK interest rates held until unemployment falls" 1111: 1109: 846:, the equivalent structure in the United States' 1730:"Members of the Monetary Policy Committee (MPC)" 569:(9 August 2022 - 8 August 2025, external member) 326:must write an open letter of explanation to the 1678:"Bank votes 8-1 to keep UK rates at record low" 1445:"Bank of England pumps Β£50bn more into economy" 160:, and is responsible primarily for keeping the 1439: 1437: 44:Interest rates since the Committee's inception 2160: 1854: 1753:"Mervyn King faces a rocky road to stability" 1585:. Monetary Policy Committee. 11 December 2014 1320:"High inflation forces King to explain again" 8: 1777:House of Commons Treasury Committee (2007). 1602: 1600: 998: 996: 575:(5 July 2023 - 4 July 2026, external member) 334:In January 2009 the Chancellor announced an 32: 1142: 1140: 1138: 933: 931: 2965: 2554: 2355: 2167: 2153: 2145: 1861: 1847: 1839: 969: 967: 965: 963: 961: 959: 929: 927: 925: 923: 921: 919: 917: 915: 913: 911: 527:(16 March 2020 to 15 March 2028, Governor) 223: 31: 3495:1997 establishments in the United Kingdom 396:relatively stable between 3.5% and 7.5%. 1812:Spreadsheet showing MPC votes since 1997 1368:"UK interest rates remain at record low" 467:Four external members, appointed by the 186: 2461:2020 Withdrawal from the European Union 2401:Second Industrial Revolution 1860s–1914 858: 1652:"UK interest rates kept at record low" 1523:"Bank of England cuts growth forecast" 1608:"Monetary Policy Committee Decisions" 1577: 1575: 1573: 1546: 1544: 303:Text of statute as originally enacted 7: 3467: 3184:London Platinum and Palladium Market 1834:Bank of England Act 1998 (full text) 1751:Litterick, David (31 January 2008). 310:Text of the Bank of England Act 1998 1396:. Central Bank News. 6 October 2011 1342:"UK interest rates lowered to 0.5%" 1293:"Rate hike fear as inflation jumps" 1196:"Monetary Policy Committee Minutes" 1094:. Bank of England. 21 February 2013 894:. Addison-Wesley. pp. 642–44. 1497:"UK inflation rate turns negative" 1003:Monaghan, Angela (20 March 2013). 25: 3414:Confederation of British Industry 2609:Expansion plans for Milton Keynes 2272:Department for Business and Trade 2267:Competition and Markets Authority 1824:Monetary Policy Committee Minutes 1318:Wallace, Tim (15 February 2012). 1198:. Bank of England. Archived from 1092:"Asset Purchase Facility Results" 3466: 3457: 3456: 2309:Office for Budget Responsibility 1927: 1632:. Bank of England. December 2014 1552:"UK interest rates cut to 0.25%" 429:vote to leave the European Union 246:Parliament of the United Kingdom 239: 38: 3510:Inflation in the United Kingdom 2245:Governor of the Bank of England 1415:Katie Allen (9 February 2012). 1246:The prudence of Mr Gordon Brown 1150:. politics.co.uk. November 2008 810:(9 August 2016 - 9 August 2022) 690:(September 2002 – January 2006) 471:for a renewable three-year term 158:Governor of the Bank of England 3424:Federation of Small Businesses 822:(November 2013 - October 2023) 804:(September 2015 – August 2021) 792:(September 2012 – August 2018) 756:(September 2009 – August 2012) 726:(September 2006 – August 2009) 714:(16 January 2006 – March 2009) 630:(September 1997 – August 2002) 203:, defined by the government's 1: 3194:Alternative Investment Market 3174:London Interbank Offered Rate 3130:List of UK building societies 2176:Economy of the United Kingdom 1610:. Bank of England. April 2010 1049:Quantitative Easing explained 844:Federal Open Market Committee 780:(August 2014 – February 2017) 684:(June 2002 – 20 October 2013) 3409:British Chambers of Commerce 3404:British Bankers' Association 1807:Official homepage of the MPC 1703:Giles, Chris (26 May 2015). 786:(March 2017 – 28 April 2017) 642:(June 1998 – September 2000) 419:, which it did on 7 August. 2297:Chancellor of the Exchequer 2277:Financial Conduct Authority 1148:"Monetary Policy Committee" 939:"Monetary Policy Committee" 867:Inflation and the 2% Target 816:(5 July 2017 - 4 July 2023) 624:(September 1997 – May 2001) 469:Chancellor of the Exchequer 401:financial crisis of 2007–08 328:Chancellor of the Exchequer 207:target (2% per year on the 3531: 3444:UK Payments Administration 2396:New Imperialism 1830s–1945 2220:Government-owned companies 708:(July 2005 – 21 June 2006) 666:(October 2000 – June 2014) 636:(December 1997 – May 1999) 490:Financial Policy Committee 464:The Bank's Chief Economist 221:United Kingdom legislation 3452: 2519:National champions policy 2514:Recessions and recoveries 2431:1979 Winter of Discontent 2366:1659–1849 Navigation Acts 2341:UK Trade & Investment 2250:Monetary Policy Committee 1925: 1870:Monetary Policy Committee 1783:. The Stationery Office. 1026:"Asset Purchase Facility" 798:(1 June 2014 - June 2021) 762:(August 2010 – July 2016) 750:(June 2009 – August 2015) 732:(October 2006 – May 2011) 238: 233: 197:Bank of England Base Rate 177:Treasury Select Committee 139:Bank of England Base Rate 119:Monetary Policy Committee 110:Monetary Policy Committee 37: 33:Monetary Policy Committee 2456:2009 bank rescue package 2451:2008 bank rescue package 2416:1929–39 Great Depression 2287:HM Revenue & Customs 2195:Employee-owned companies 1817:29 November 2017 at the 1243:Keegan, William (2003). 974:Bank of England (2007). 768:(July 2013 - March 2020) 744:(March 2009 – July 2014) 696:(June 2003 – March 2006) 331:levels in the meantime. 228:Bank of England Act 1998 125:) is a committee of the 2624:List of counties by GVA 2406:1873–79 Long Depression 2371:Agricultural Revolution 2336:UK Statistics Authority 981:. 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Bank of England. 652:Christopher Allsopp 409:quantitative easing 367:Traditionally, the 345:quantitative easing 150:quantitative easing 148:framework, such as 87:Parent organization 34: 3334:Telecommunications 2499:Economic geography 1989:David Blanchflower 1072:on 30 October 2010 718:David Blanchflower 622:Dame DeAnne Julius 594:(June – July 1997) 393:Treasury Committee 314:legislation.gov.uk 193: 3480: 3479: 3383: 3382: 3162:Lloyd's of London 2873: 2872: 2845:Industrialisation 2759:Industrialisation 2542: 2541: 2471:COVID-19 pandemic 2391:1815–46 Corn Laws 2142: 2141: 1894:Catherine L. Mann 1790:978-0-215-03607-0 1732:. Bank of England 1529:. 4 February 2016 1374:. 4 November 2010 1273:. Bank of England 1256:978-0-470-84697-1 1224:. Bank of England 1028:. Bank of England 901:978-0-13-204122-5 865:Bank of England, 586:Sir Edward George 561:Catherine L. 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1915: 1912: 1910: 1907: 1905: 1902: 1900: 1897: 1895: 1892: 1890: 1889:Ben Broadbent 1887: 1885: 1884:Andrew Bailey 1882: 1881: 1879: 1875: 1871: 1864: 1859: 1857: 1852: 1850: 1845: 1844: 1841: 1835: 1832: 1830: 1827: 1825: 1822: 1820: 1816: 1813: 1810: 1808: 1805: 1804: 1800: 1792: 1786: 1782: 1781: 1773: 1770: 1758: 1754: 1747: 1744: 1731: 1725: 1722: 1710: 1706: 1699: 1696: 1683: 1679: 1673: 1670: 1658:. 11 May 2015 1657: 1653: 1647: 1644: 1631: 1625: 1622: 1609: 1603: 1601: 1597: 1584: 1578: 1576: 1574: 1570: 1557: 1553: 1547: 1545: 1541: 1528: 1524: 1518: 1515: 1503:. 19 May 2015 1502: 1498: 1492: 1489: 1477: 1473: 1466: 1463: 1451:. 5 July 2012 1450: 1446: 1440: 1438: 1434: 1422: 1418: 1411: 1408: 1395: 1389: 1386: 1373: 1369: 1363: 1360: 1347: 1343: 1337: 1334: 1321: 1314: 1311: 1298: 1294: 1288: 1285: 1272: 1266: 1263: 1258: 1252: 1248: 1247: 1239: 1236: 1223: 1217: 1214: 1201: 1197: 1191: 1188: 1175: 1171: 1165: 1162: 1149: 1143: 1141: 1139: 1135: 1122: 1118: 1112: 1110: 1106: 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502: 497: 495: 491: 483: 481: 479: 470: 466: 463: 460: 456: 454: 450: 449: 448: 442: 440: 438: 433: 430: 426: 420: 418: 414: 410: 406: 402: 399:However, the 397: 394: 388: 386: 382: 378: 373: 370: 362: 360: 356: 354: 350: 346: 341: 337: 332: 329: 325: 315: 311: 307: 304: 300: 296: 294: 290: 287:23 April 1998 286: 284: 280: 275: 271: 268: 266: 262: 257: 255: 251: 247: 237: 232: 225: 219: 217: 215: 214:fiscal policy 210: 206: 202: 198: 189: 182: 180: 178: 174: 169: 167: 163: 159: 155: 151: 147: 142: 140: 136: 132: 131:interest rate 128: 124: 120: 111: 108: 104: 100: 94: 90: 84: 80: 76: 75:Andrew Bailey 73: 67: 64: 60: 56: 52: 48: 41: 36: 30: 19: 3482: 3341:Supermarkets 3307:Construction 3302:Architecture 3137:Canary Wharf 2970:Resource and 2953:Unemployment 2924:Minimum wage 2887:Billionaires 2784:Silicon Glen 2656:M11 Corridor 2249: 2109:Spencer Dale 2094:Rachel Lomax 2079:Nemat Shafik 2069:Martin Weale 2044:John Vickers 2004:David Walton 1974:Charles Bean 1964:Andy Haldane 1954:Andrew Large 1937:Past members 1909:Jon Cunliffe 1899:Dave Ramsden 1869: 1779: 1772: 1760:. 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Retrieved 890: 861: 829: 826: 820:Jon Cunliffe 796:Andy Haldane 778:Nemat Shafik 760:Martin Weale 736:Spencer Dale 706:David Walton 700:Rachel Lomax 664:Charles Bean 579: 573:Megan Greene 537:Dave Ramsden 518: 505: 498: 487: 474: 446: 434: 421: 398: 389: 377:Gordon Brown 374: 366: 357: 333: 321: 293:Commencement 283:Royal assent 218: 194: 170: 143: 122: 118: 116: 78: 61:Determining 29: 3317:Real estate 3041:Agriculture 2828:Cardiff Bay 2817:Agriculture 2774:Oil and gas 2749:Agriculture 2676:Silicon Fen 2651:M4 corridor 2644:London Plan 2465:Growth deal 2292:HM Treasury 2262:Company law 2231:governance, 2089:Paul Tucker 2084:Paul Fisher 2074:Mervyn King 2064:Mark Carney 2059:Marian Bell 2049:Kate Barker 1999:David Miles 1455:27 February 1378:19 November 1326:27 February 1098:27 February 832:Mervyn King 766:Mark Carney 748:David Miles 742:Paul Fisher 682:Paul Tucker 676:Marian Bell 616:Mervyn King 494:Kevin Warsh 443:Composition 437:Kevin Warsh 405:Mervyn King 343:process of 297:1 June 1998 3505:Committees 3489:Categories 3371:High-speed 3366:Inter-city 3282:Automotive 3262:Healthcare 3250:Television 3240:Newspapers 3084:Materials 2999:Geothermal 2972:production 2914:Labour law 2897:Demography 2880:and labour 2661:Manchester 2572:Birmingham 2504:Free trade 2233:regulation 2124:Tim Besley 2039:John Gieve 1944:Adam Posen 1736:1 February 1533:4 February 1400:31 January 854:References 754:Adam Posen 724:Tim Besley 515:Membership 508:Parliament 501:UK economy 457:The three 254:Long title 79:ex officio 3388:Trade and 3351:Transport 3298:Property 3277:Aerospace 3212:Education 3157:Insurance 3105:Financial 2989:Biodiesel 2865:Transport 2794:Transport 2754:Edinburgh 2726:Transport 2701:Wiltshire 2696:Transport 2671:Sheffield 2629:Liverpool 2492:Recurrent 2319:Banknotes 2229:Currency, 2183:Companies 1949:Alan Budd 1322:. City AM 1249:. 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Index

BEA 1998

monetary policy
Andrew Bailey
Monetary Policy Committee
Bank of England
interest rate
United Kingdom
Bank of England Base Rate
monetary policy
quantitative easing
forward guidance
Governor of the Bank of England
Consumer Price Index
inflation
General Election
Treasury Select Committee

Bank of England Base Rate
price stability
inflation
Consumer Price Index
fiscal policy
Parliament of the United Kingdom
Long title
Citation
1998
Royal assent
Commencement
Text of statute as originally enacted

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