Central Bank Independence and the Conduct of Monetary Policy in the United Kingdom

• Author(s): Mr.Jan Kees Martijn, Hossein Samiei,
• Publisher: International Monetary Fund
• Pages: 22
• ISBN_10: 145185840X
  ISBN_13: 9781451858402
  
• Language: en
• Categories: Business & Economics / Money & Monetary Policy , Business & Economics / Inflation , Business & Economics / Banks & Banking ,

Description:... The U.K. monetary policy framework, which combines inflation targeting with operational independence, provides a suitable arrangement for focused and credible monetary policy. However, potential weaknesses could result from features that have not yet been fully tested: the credibility and transparency of the inflation forecasts, which form the core of policy decisions, have diminished as a result of independence; and the framework could encourage excessive activism and frequent changes in interest rates. Although policy coordination could also suffer from independence, the new partly rules-based fiscal and monetary regimes will promote overall macroeconomic stability.