Monetary Policy

Michael Salib and Mesha Ghazaleh The Bank’s monetary policy objectives are some of the most significant objectives bestowed by Parliament on any UK public authority. They are to maintain price stability and, subject to that, support the Government’s economic policy, including its objectives for growth and employment. In our paper we offer a historical and … Continue reading The Bank of England’s statutory monetary policy objectives: a historical and legal account →

Natalie Burr In economic theory, expectations of future inflation are an important determinant of inflation, making them a key variable of interest for monetary policy makers. But is there empirical evidence to suggest monetary policy can help determine inflation expectations? I answer this question in a recent paper by applying a Bayesian proxy vector autoregression … Continue reading Shaping inflation expectations: the effects of monetary policy →

Misa Tanaka Today the Bank published the 2025–28 ‘Bank of England Agenda for Research’ setting out the key areas for new research over the coming years and a set of priority topics for 2025. Misa Tanaka works in the Bank’s Research Hub and is the Bank’s Head of Research. If you want to get in … Continue reading Launch of the 2025–28 Bank of England Agenda for Research →

Before Bank Underground goes off on its Christmas holidays, it’s time for the Annual Bank Underground Christmas Quiz! We hope you enjoy testing your knowledge on our festive themed questions on economics, finance and all things central banking… If you want to get in touch, please email us at bankunderground@bankofengland.co.uk or leave a comment below. Comments will only … Continue reading The Bank Underground Christmas Quiz 2024 →

Nicolò Bandera and Jacob Stevens How should the central bank conduct asset purchases to restore market functioning without causing higher inflation? The Bank of England was faced with this question during the 2022 gilt crisis, when it undertook gilt purchases on financial stability grounds while inflation was above 10%. These financial stability asset purchases could … Continue reading Stable gilts and stable prices: assessing the Bank of England’s response to the LDI crisis →

Rebecca Mari and Matteo Ficarra. Floods are the most costly natural disaster in Europe. In the UK, they account for around GBP1.4 billion in annual losses. Yet, evidence on the macroeconomic implications is inconclusive. GDP often shows a puzzling delayed response, and prices can be pushed in opposite directions. Using a novel county level data … Continue reading Weathering the storm: the economic impact of floods and the role of adaptation →

Boromeus Wanengkirtyo, Francesca Diluiso, Rebecca Mari, Jenny Chan, Ambrogio Cesa-Bianchi and Alex Haberis. Climate change is becoming increasingly important for monetary policy as the world transitions into greener economies and climate change’s physical impacts become more prominent. This is complementary, but distinct to, examining how climate change affects financial stability risks (Carney (2015)). This series … Continue reading Climate and monetary policy series →

Francesca Diluiso, Boromeus Wanengkirtyo and Jenny Chan. This post examines key aspects of climate mitigation policies that could matter for monetary policy, using insights from structural climate macroeconomic models (Environmental Dynamic Stochastic General Equilibrium). Three main findings emerge: first, mitigation policies – like carbon pricing – can be a direct source of shocks, creating potential … Continue reading Some implications of climate policy for monetary policy →

David Elliott, Ralf Meisenzahl and José-Luis Peydró Capital flows and credit growth are strongly correlated across countries. Macroeconomic evidence suggests that this ‘global financial cycle’ is largely driven by US monetary policy: expansionary policy by the Federal Reserve drives increases in lending globally, while contractionary Fed policy leads to a tightening of global financial conditions. … Continue reading Nonbank lenders as global shock absorbers →

Francesca Diluiso and Aydan Dogan To achieve the emissions reduction targets outlined in The Paris Agreement, many economies have started implementing various types of climate policies. These policies, which include subsidies for green production or investment, carbon taxes, and cap and trade schemes, are crucial for guiding the transition to a greener economy. However, by … Continue reading International spillovers from climate policy →