Has the Bank done enough to control inflation?

Article Abstract:

The Bank of England has independence to set United Kingdom interest rates, which have been raised five times since May 1997. An output gap analysis indicates that UK inflation could increase, which means that interest rates will have to be raised to curb growth to below trend levels, in order for the government to meet its inflation target. A structural approach could be more useful than an output gap analysis, however. A structural approach indicates that unemployment can fall further than before without inflation becoming a problem. This means that growth may not have to be pushed below trend for the government's inflation target to be met.

Banking Institutions, Depository Credit Intermediation, Prices, Interest Rates, DEPOSITORY INSTITUTIONS, Bank of England, Banks (Finance)

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Keeping the lid on inflation

Article Abstract:

The UK goverment aims to control inflation and there is pressure to raise interest rates due to the weakness of pound sterling. In contrast the weakness of consumer spending may influence policymakers not to raise rates. UK inflation rates are drifting upwards and this is undermining the government's ability to reach its inflation target. Measuring the money supply is not easy because different conclusions are reached depending on which definition of money is taken. If interest rates are not raised the UK may lose credibility.

Economic aspects

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Can the US deficit be tamed?

Article Abstract:

The US federal deficit stood at 3.1% of gross domestic product (GDP) in 1994. Interest rates are high in real terms which pushed up the cost of the deficit. Some analysts argue that the long term growth rate for the economy can be boosted by reducing the deficit. Major cuts in public spending are likely to be deflationary and this is likely to affect growth, since it is improbable that investment will rise enough to offset the cuts. Long rates are likely to be reduced by sending cuts.

Analysis, United States economic conditions, Fiscal policy

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