Government ministers should be made to watch the Scotonomics videos on you tube, they might then better understand how a countries finances work. Rachel Reeves thinks she can run the economy like a household budget.
The Chancellor still sets the inflation rate (CPI) target. So in effect this is steering the Monetary Policy Committee to set interest rates consistent with that target. It is indirect control.
But what happens when they don't hit the govt inflation target? Indirect control disappears
They do in the sense that the BoE get set the interest rates. But constrained by the target, set by the government.
I'm not saying it's a good system by the way but there is some control - the MPC doesn't set and cannot change the CPI goal.
Government ministers should be made to watch the Scotonomics videos on you tube, they might then better understand how a countries finances work. Rachel Reeves thinks she can run the economy like a household budget.
The Chancellor still sets the inflation rate (CPI) target. So in effect this is steering the Monetary Policy Committee to set interest rates consistent with that target. It is indirect control.