What is the Monetary Policy Committees main responsibility?
The Bank of England Act 1998 formally sets out the role and constitution of the MPC. In relation to monetary policy, the objectives of the Bank of England shall be (a) to maintain price stability (ie continued low inflation), and (b) subject to that, to support the economic policy of the Government, including its objectives for growth and employment. The Inflation Target The inflation target the MPC has been given by the Chancellor since 1997 has been a 2.5% increase, over the previous twelve months, in the retail prices index excluding mortgage interest payments RPI(X). The MPC has operational freedom how it meets that target. Decisions on what actions need to be taken to achieve the target are taken by the MPC, on the basis of a majority vote. The MPC’s main role each month is to make decisions on the base rate of interest – the benchmark for the Central Bank’s daily operational of monetary policy in the UK Monetary Policy Activism Up to August 2001, the MPC has taken fifty-one inter
