BOE's Carney: We Have Room to Further Lower Interest Rate

The transcript discusses the trade-offs faced by the Monetary Policy Committee (MPC) of the Bank of England in stabilizing prices versus impacting output and employment. It elaborates on potential policy tools available, such as liquidity and credit easing, and the associated trade-offs. The direction of these trade-offs depends on the balance of forces. The discussion also covers conventional and unconventional monetary policies, with a focus on the MPC's judgment on lowering the Bank rate and the range of unconventional options like quantitative easing.

What is the primary trade-off the MPC faces according to the discussion?

• Stabilizing prices versus output and employment

• Enhancing exports versus reducing imports

• Increasing interest rates versus lowering taxes

• Balancing inflation and currency value

Why might the MPC initially prefer liquidity and credit easing measures?

• To decrease government spending

• To avoid exacerbating the drop in the pound

• To increase the value of the pound

• To immediately raise interest rates

What determines the direction of the MPC's response?

• The balance of economic forces

• The unemployment rate

• The current inflation rate

• The level of government debt

What is the MPC's stance on using conventional monetary policy tools?

• They are the first line of action if needed

• They are not considered at all

• They are only used in extreme cases

• They are always preferred over unconventional tools

Which unconventional measures are mentioned as options for the MPC?

• Quantitative easing and credit easing

• Tax cuts and increased government spending

• Currency devaluation and import restrictions

• Raising interest rates and reducing exports