The Bank of England (BoE) interest rate is set by its monetary policy committee. In 2005, the BoE claimed that its post-1992 inflation-targeting policy had caused smaller cyclical fluctuations in the economy than during any period since World War II. The latest recession, however, forced the bank to slash interest rates. In 2009, it embarked on a £200 billion program of QE—facilitated by the purchase of government gilts—with the object of boosting spending and increasing bank lending. The efficacy of QE has historically been difficult to detect, however, and it is unclear to what extent QE is responsible for the slight improvements in spending and GDP growth that followed the bank’s action. During the recent global recession, the BoE has had the broadest form of unconventional monetary policy among the major central banks, seeking to boost broad as well as narrow money and access to private credit and to reduce bond yields for both the public and private sectors.
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