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

Author/Editor:

Hossein Samiei ; Jan Kees Martijn

Publication Date:

December 1, 1999

Electronic Access:

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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.

Series:

Working Paper No. 1999/170

Subject:

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

English

Publication Date:

December 1, 1999

ISBN/ISSN:

9781451858402/1018-5941

Stock No:

WPIEA1701999

Pages:

22

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