BOE's Carney: MPC Tradeoff on Inflation, Output

BOE's Carney: MPC Tradeoff on Inflation, Output

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The transcript discusses the Monetary Policy Committee's (MPC) approach to balancing inflation and output stabilization. It highlights the challenges posed by sterling's depreciation and the need for a longer horizon to return inflation to target. The MPC implements a comprehensive package of measures to stimulate the economy, considering the low interest rate environment and ensuring the stimulus is effective. The focus is on timely and coherent actions to support growth while managing inflation expectations.

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5 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main tradeoff the MPC is facing?

Increasing domestic costs and reducing output

Returning inflation to target and stabilizing output

Managing sterling's appreciation and inflation

Balancing inflation and unemployment

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why does the MPC plan to return inflation to target over a longer period?

To disregard the effects of sterling's depreciation

To avoid undesirable outcomes like lost output and unemployment

To increase domestic costs significantly

To immediately stabilize the economy

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the purpose of the MPC's comprehensive package of measures?

To increase interest rates

To ensure inflation settles at the target over a longer period

To stabilize the currency exchange rate

To reduce the Bank rate permanently

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does cutting the Bank rate help the economy?

It increases the value of sterling

It immediately eases financing conditions for households and firms

It reduces the need for foreign investments

It raises interest rates on loans

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What challenge does the MPC face when interest rates are very low?

Inflation targets are easily met

The financial system becomes more stable

The Bank rate cuts are fully passed on

Interest rates on loans might increase