Click here for our latest COVID-19 updates.
22nd January 2015
Simon Caunt, Deputy Agent for the Bank of England, visited Brampton College to deliver a presentation about Monetary Policy and the Bank of England’s Monetary Policy Committee frameworks used to control inflation.
In the riveting and engaging talk, he covered many aspects of this. Specifically, what his job at the Bank of England entails and the devices and data used by the Monetary Policy when deciding the rate of interest. In his job, he regularly has to review financial statistics which are then fed directly to Mark Carney, the Governor of the Bank of England, who ultimately decides where to raise or to drop interest rates or to keep them as they are. He spoke in depth of the vital use of “fan charts” when determining the interest rates due to uncertainty when predicting GDP growth and CPI inflation. In one of the fan charts illustrating economic growth, the Bank of England’s estimates of past economic growth has been in line with data published by the ONS (Office for National Statistics), however in another diagram illustrating predicated interest rates drawn in August 2014 and November 2014, there is a stark and significant contrast between the 3 months. He explained that a rise in the interest rate will be halted for some time because of a drop in the housing market owing to a fall in mortgage approvals. He revealed there has been some dispute in the Monetary Policy Committee that interest rates should be raised sooner rather than later since it is argued that slack in the labour market is being absorbed at an incredibly fast rate, more quickly that it was expected and that participation in the labour market has increased as well among the elderly and women.
Currently inflation is at 1.3% – very near to the lower permissible limit and has been close to this level for some time. Therefore he acknowledged that it can be possible that the Monetary Policy Committee might have to write an open letter to The Chancellor, George Osborne in the very near future to explain why inflation has fallen below target, something that has not happened since the 2008/2009 recession.
After the talk, he opened the floor to questions – one question asking how important it is that the MPC is not subject to government pressures and he replied that it is deeply crucial that the MPC remains impartial because it may lead to unwanted effects down the road.
Ashish Singhal, A level Economics student
As part of this week’s busy programme of UCAS events, we welcomed back a group of past students who came...
My name is Gaurika Singh and I am a final year A level student at Brampton College. I will be...