Central Bank Independence and the Conduct of Monetary Policy in the United Kingdom

December 1, 1999

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Format: Chicago

Hossein Samiei, and Jan Kees Martijn. Central Bank Independence and the Conduct of Monetary Policy in the United Kingdom, (USA: International Monetary Fund, 1999) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The U.K. monetary policy framework, which combines inflation targeting with operational independence, provides a suitable arrangement for focused and credible monetary policy. However, potential weaknesses could result from features that have not yet been fully tested: the credibility and transparency of the inflation forecasts, which form the core of policy decisions, have diminished as a result of independence; and the framework could encourage excessive activism and frequent changes in interest rates. Although policy coordination could also suffer from independence, the new partly rules-based fiscal and monetary regimes will promote overall macroeconomic stability.

Subject: Banking, Central bank autonomy, Central banks, Fiscal policy, Inflation, Inflation targeting, Monetary policy, Monetary policy frameworks, Prices

Keywords: Central bank, Central bank autonomy, Central bank independence, Gradualist monetary policy, Inflation, Inflation target, Inflation targeting, Instrument independence, Interest rate, Interest rate decrease, Interest rate expectation, Interest rate projection, Interest rate trend, Monetary policy, Monetary policy decision, Monetary policy decision making, Monetary policy frameworks, MPC behavior, Policy coordination, Stabilizing monetary policy response, U.K. government, United Kingdom, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/170
Stock No:

WPIEA1701999
ISBN:

9781451858402
ISSN:

1018-5941

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