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  • Monetary policy

Click to read the article below and then answer the questions:

Bank of England faces its biggest inflation challenge since independence

  • When was the Bank of England (BOE) granted operational independence?

  • Why was the BoE granted independence?

  • Distinguish between (i) inflation; (ii) disinflation; and (iii) deflation

  • The article references Sir Mervyn King’s comment about the ‘NICE’ decade of growth. What was he referring to?

  • Given that a monetary policy-induced recession is likely, evaluate whether the BoE should tighten monetary policy to tackle the big inflation overshoot

Gavin Clarke, Emmanuel College

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