About a Rate of (General) Interest: How Monetary Policy Transmits

Abstract

Understanding how the monetary policy transmission mechanism operates is essential for policymakers, such as the Bank of England’s Monetary Policy Committee (MPC), to assess and predict the impact of their policies on the economy – and hence for their ability to deliver on their price stability mandate. This article outlines the Bank of England’s staff view on the impact that conventional monetary policy (ie, changes in the policy rate, or expectations of its future path) is believed to have on key UK variables, which has informed MPC discussions.

Keywords: Interest Rates, Bank of England, Monetary Policy