What The Challenge Involves
the teams
the task
judge's questions
resource material
Target Two Point Zero invites teams of 16-18 year old students to take on the role of the Bank of England's Monetary Policy Committee. Each team will assess the state of the economy and the outlook for inflation, and then set the interest rate to meet the Government's inflation target. It will present its analysis and its decision to a panel of Bank of England judges.
the teams 
Each school or college can enter one team. Each team should consist of four students. The composition of the team and the way in which the team members are chosen is entirely up to teachers and students. Although the Challenge will probably appeal mainly to students of economics and business, students studying any subject can take part. The main criteria for taking part are having an interest in learning about how the economy works and having skills which will help the team towards its objective of presenting a well-argued case for its interest rate decision.
Each school should nominate a teacher to act as the team's adviser and coach, and to accompany the team to the presentation events. Each team should also nominate a team captain. He or she will act as the team co-ordinator and, like the Chairman of the Monetary Policy Committee, will have a casting vote, should the team decide to put its interest rate decision to a vote, which then results in a tie.
help and support
Although only the four team members will represent their school or college at the presentation events, other class and school members, teachers or friends are encouraged to get involved by helping the team to undertake their research and prepare their case. The more students that get involved the better. You could consider the following approaches:
The team of four could work largely on their own, seeking the assistance of teachers and others as necessary.
The team might want to consider identifying a reserve who will work closely with the team and can replace a team member who is unable to attend a presentation event.
The class could divide into several teams of four and hold an intra-class play-off to decide which team should represent the school or college in the three presentation rounds.
The whole class could help with the research and preparation and brief the team of four in the same way that economists in the Bank brief the Monetary Policy Committee. The class could divide into small groups, with each group monitoring a different aspect of the economy and presenting their findings to the team.
Some or all of the class members could form a Monetary Policy Committee, could carry out the research and preparation and then, like the real MPC, could vote on what the interest rate should be. A team of four would be selected to present the views of their Monetary Policy Committee in the presentation rounds.
the task
The Challenge has three identical rounds - regional heats, area finals and the national final. In each round, the team will examine economic conditions and decide what level of interest rate it would set to achieve the Government's inflation target. The inflation target is currently 2.0% and teams should decide what interest rate they would set to achieve this target.
Each team will then prepare and give a short presentation, arguing the case for its interest rate decision, to a panel of judges. The judges will ask team members some questions about their decision and presentation.
using information and data to assess economic conditions
Teams can use information and data from any source, but all the essential data will be provided by the Bank.
In the section on 'Inflation', we discuss some of the principal causes of inflation. Essentially, teams will need to assess the balance between demand and supply (output) across the economy as a whole, and the extent to which any imbalance might lead to more or less inflationary pressure. They will look at the various components of demand - for example, consumer spending and exports; developments in the labour market - such as wages and employment; and information on costs and prices. And they will look at data on different sectors, such as manufacturing and retailing.
We will tell you about the data that teams may wish to look at to assess trends and the recent picture - both official data and business surveys. But teams can also make use of first-hand information, perhaps from their local areas. Much of the data that are available only provide a partial picture of the economy. Teams will have to piece the various bits of evidence together to form an overall view. But the data rarely say the same thing about the current economic picture, or provide clear signals about the economic outlook. MPC members have to use their judgement throughout the process. And that is what the teams will have to do.
the decision
In each round, the team should take the Monetary Policy Committee's interest rate on the day of its presentation as its starting point, and decide whether to change the interest rate and, if so, whether to increase it or decrease it, and by how much, and to justify its decision. Just like the MPC, the team's assessment of economic conditions and the outlook for inflation should be as up to date as possible. This could, of course, mean some last minute changes if the team receives new data that cause it to alter its view of the inflation outlook and, hence, its interest rate decision.
The task is not to find the right answer. There is no right answer. Deciding on the level of interest rates is a matter of judgement and, like the real policy-makers, team members may disagree. There may, for example, be differences of opinion about whether to change interest rates. Even if the team members agree that rates should change, they may disagree about whether rates should go up or down, or about the extent of the change, say, 0.25% or 0.5%, or some other number. During the preparation stage, the team may choose to vote on its interest rate decision. If this results in a tie, the team captain will have the casting vote. If there is a split decision, both sides of the argument must be explained in the presentation to the judges.
the presentation
Having made its interest rate decision and prepared its case, each team will make its presentation to a panel of judges. Presentations should be no more than 15 minutes long. The precise format of the presentation is up to the team but it should:
1. examine current economic conditions;
2. give an assessment of the outlook for the economy and inflation;
3. present the team's interest rate decision and supporting evidence to the judges. If team members have different opinions on what should happen to the interest rate, this will need to be explained to the judges in the presentation.
judges' questions
Following the presentation, the judges will ask the team a series of questions. This is an important part of the proceedings. The questions allow the judges to test the team's understanding and knowledge, to see how they justify their policy decision, just as the MPC has to do in public, and to see how they think on their feet. Team members might be asked to clarify, or expand on, points made during their presentation or they might be asked about the workings of the economy and how their policy decision will achieve the inflation target. But the style of questioning will be constructive and sympathetic.
Team members may confer but will be pressed for an answer if they take too long. They should work together as a team when answering the judges' questions. Answers should not be dominated by one or two team members. The section on 'Your Presentation' gives some more guidance on answering the judges questions
The section on 'Judging' gives details of the criteria that the judges will use to evaluate each team's performance.
resource material
The website and resource manual set out clearly all the economic information and much of the data needed to take part in the Challenge. They explain the main principles behind monetary policy and describe the UK's framework and processes. They contain sections on:
money and financial markets;
demand and output;
the labour market;
costs and prices.
They include an explanation of why the Monetary Policy Committee looks at each of these aspects of the economy when deciding the outlook for inflation. They also include key data and an explanation of how teams might use the data. Finally, they give teams guidance on how to set about developing and making their presentation and on answering the judges' questions.
YOU SHOULD NOT BE PUT OFF BY THE AMOUNT OF INFORMATION AND DATA. YOU DO NOT NEED TO READ AND UNDERSTAND EVERYTHING ALL AT ONCE. YOU CAN REFER TO DIFFERENT PARTS OF THE WEBSITE AND THE RESOURCE MANUAL AS NECESSARY.
In addition to help from the Bank, The Times will be
running a series of fortnightly briefings in support of the
Challenge. These will appear from 22 September 2008 in the Business
section and on their website.
©2000-2009 Bank of England.
