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

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  • Hossein Samiei
  • Mr. Jan Kees Martijn

Abstract

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.

Suggested Citation

  • Hossein Samiei & Mr. Jan Kees Martijn, 1999. "Central Bank Independence and the Conduct of Monetary Policy in the United Kingdom," IMF Working Papers 1999/170, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/170
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    References listed on IDEAS

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    2. Leitemo, Kai, 2003. "Targeting Inflation by Constant-Interest-Rate Forecasts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 609-626, August.
    3. Anis Chowdhury, 2002. "DOES INFLATION AFFECT ECONOMIC GROWTH? The relevance of the debate for Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 7(1), pages 20-34.
    4. Charles A. E. Goodhart, 2001. "Monetary transmission lags and the formulation of the policy decision on interest rates," Review, Federal Reserve Bank of St. Louis, vol. 83(Jul), pages 165-186.
    5. Michal Skořepa & Viktor Kotlán, 2006. "Inflation Targeting: To Forecast or To Simulate?," Prague Economic Papers, Prague University of Economics and Business, vol. 2006(4), pages 300-314.
    6. Frederic S Mishkin, 2004. "Can Central Bank Transparency Go Too Far?," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Simon Guttmann (ed.),The Future of Inflation Targeting, Reserve Bank of Australia.
    7. Witold Jakóbik, 2006. "Dylematy koordynacji polityki pieniężnej i fiskalnej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1-2, pages 1-17.
    8. Malcolm Edey, 2006. "An Australian perspective on inflation targeting, communication and transparency," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in Asia: approaches and implementation, volume 31, pages 3-24, Bank for International Settlements.
    9. de Ramon, Sebastian & Francis, William & Milonas, Kristoffer, 2017. "An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database," Bank of England working papers 652, Bank of England.
    10. Donghyun Park & Junggun Oh, 2005. "Korea's Post-Crisis Monetary Policy Reforms," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 8(04), pages 707-731.
    11. Malcolm Edey & Andrew Stone, 2004. "A Perspective on Monetary Policy Transparency and Communication," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Simon Guttmann (ed.),The Future of Inflation Targeting, Reserve Bank of Australia.
    12. Goodhart Charles A.E., 2005. "The Monetary Policy Committee's Reaction Function: An Exercise in Estimation," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-42, August.
    13. Goodhart, Charles, 2004. "The Monetary Policy Committee's reaction function: an exercise in estimation," LSE Research Online Documents on Economics 24708, London School of Economics and Political Science, LSE Library.

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