Posts Tagged ‘interest rates’

The Bank of England

The Bank of England plays a very important role in the economy of the United Kingdom.

Interest Rates set by The Bank of England

Probably the Bank of England is mostly in the news because it sets the interest rate for the UK. Each month the Monetary Policy Committee meets and decides what to do about the level of interest rate.

The Bank of England does more!

The Bank of England does much more than just set interest rates and the website for the bank will give you a lot of information about it.

You will see that they produce bank note notes, care for the economic security of the UK, monitor banks and more.

Here is the link to The Bank of England website.

The Bank of England

The Bank of England Monetary Committee must be really thinking hard about their next move. Inflation continues to be a problem in the UK and yet the economy is still floundering.

The Next Move

What will the The Bank do? Is it time to raise interest rates? Normally inflation in a country is caused by the economy heating up and people spending too much and so prices are able to be increased. Inflation today is being caused more by outside forces created by the growing consumer demands of developing countries pushing up commodity prices. Simply increasing interest rates in the UK is not going to make much of dent in inflation created outside of the UK. Raising interest rates will certainly take some money out of the hands of the people with mortgages and into the hands of the banks. In turn they could increase interest on savings accounts and encourage people to save which in itself could take money out of circulation.

Reducing money in the purses of consumers at the moment could well fuel a second tier recession. Already people have less money to spend on goods as the basic cost of essential items is draining their resources. It looks like that if the Bank of England raise interest rates it may be a small increase as a token gesture.