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Home > Research > Monetary Policy Themes
 

Monetary Policy Themes

A principal objective of any central bank is to ensure stable prices; this is what is meant by monetary stability. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee (MPC). As in most other developed countries, monetary policy usually operates in the UK through influencing the price at which money is lent - the interest rate. However, in March 2009 the Bank's Monetary Policy Committee announced that in addition to setting Bank Rate, it would start to inject money directly into the economy by purchasing assets - often known as quantitative easing. This means that the instrument of monetary policy shifts towards the quantity of money provided rather than its price.

The Bank's research in the area of monetary stability supports the operation of monetary policy in pursuit of the inflation target. This research can be grouped into the following themes: