The Monetary Policy Committee (MPC) decides what policy action to take for those countries central bank or government. It influences how much money is in the economy and how much it costs to borrow, considering the Governments economic aims for growth and employment.
Monetary policy affects how much prices are rising. This is called the rate of Inflation. The MPC set the monetary policy to achieve the Governments rate of keeping the target inflation at 2%. Low and stable inflation is good for the UK economy.
However, the June 2023 inflation rate currently sat at 7.9%
The MPC also sets the Bank Rate or more commonly known as the Bank of England Base Rate. The bank rate determines the interest rate we pay to commercial banks that hold money. It influences the rates banks charge consumers to borrow money or pay on their saving. Bank of England can change the base rate as a means of influencing the UK economy. Lower rates encourage people to spend more, but this can lead to inflation – an increase to living costs as goods become more expensive. Higher rates can have the opposite effect.
The current Base Rate as of August 2023 is 5.25%.
The UK MPC meets eight times a year or usually every 6 weeks. The remaining dates of 2023 being.
- 21st September
- 2nd November
- 14th December
