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Discuss the measures taken by the current Labour government to enhance the independence of the Bank of England and the arrange
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Discuss the measures taken by the current Labour government to enhance the independence of the Bank of England and the arrangements put in place to ensure its accountability. Are these institutional arrangements ideal? Throughout 1989 - 1991 New Zealand, Chile and Canada all took the initiative to increase the independence of their central banks and then in 1997 the new Labour Government followed this trend giving the Bank of England independence to set interest rates. With effect from June 1997 the Bank formed a Monetary Policy Committee (MPC) which meets on a monthly basis to determine interest rates. Their role is to decide on the size and direction of change of the nominal base rate needed for the Bank to hit the inflation target set by the Government, which currently stands at 2%. The MPC comprises of the governor, deputy governor and 6 other members, 2 of which are elected...
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