What is The MPC?

We all know that The UK’s interest rates are set by the  its central bank , but who are the ones actually  determining the nation’s monetary policy and what are their justifications? The task of determining the interest rates is upon the hands of the Monetary Policy Committee (hence MPC). The MPC is a committee of the Bank of England consisting of  9 members,  i.e. governor of the Bank, 2 deputy Governors, Bank’s Chief Economist, Executive Director of markets and 4 other members appointed by the Chancellor of Exchequer. The primary basis for creating the MPC is so that there is no form of political interference in the decision making process , thus adding credibility to the interest rates set.  The members meet for 2 and half days every month, discussing the UK’s economic situation and formulating its monetary policy with the primary aim of price stability. Therefore, they must take decisions that will help the country achieve its inflation target. The monetary policy must  be constructed in a way that it also helps the government achieve other macroeconomic objectives i.e.  growth and unemployment, which could consequently result in quantitative easing . During the 2 and half days, The MPC studies data referencing to the UK and worldwide economy, presents forth  opinions about how interest rates should be changed and how these changes can affect the  nation, and chooses a policy that is like to get the majority of votes from the members. It can be argued that the state and future of the UK economy is essentially in the hands of 9 people, which alludes to the fact the MPC does receive large mounts of criticism, especially because they seem to be predominantly focused on price stability and due to their actions towards quantitative easing, which can have a deleterious effect in the near future. If you guys want to learn more about the MPC, check out the links below:

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