The MPC Meeting

You chair the Bank of England’s Monetary Policy Committee for three years. Twelve meetings, one lever, and a remit to keep CPI inflation at 2%. The catch is that rate changes take months to work, so you are always steering for the future rather than for today’s figures. Choose an energy shock, a boom and bust, a credit crunch, or a random three years.

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What it covers

• How interest rates affect aggregate demand, and the time lags involved
• The difference between demand shocks and supply shocks, and why supply shocks create a dilemma
• Inflation targeting, the 2% remit and open letters to the Chancellor
• The zero lower bound and why quantitative easing was needed in 2009 and 2020
• Evaluation points for essays on the effectiveness of monetary policy

Edexcel A Level Economics A (9EC0), Theme 2.6 Macroeconomic objectives and policies.