Why did the bank of England adopt a policy of inflation targeting in Essay

Why did the bank of England adopt a policy of inflation targeting in 1992 and how has the pursuit of inflation targeting been linked to attempts to make monetar - Essay ExampleAny government has the power to spoil the economy of the country and not only does it regulate the economy, it has a vital enjoyment to ensure that the economic condition remains steadfast. It is the responsibility of the government to ensure that all the aspects of economy maintain a stable train so that the country can grow and expand. giving medication regulates many things in an economy including inflation, exports and imports, impairments of many vital commodities, and many important economic aspects.Government of England has entrusted the job of determining the monetary policy, in the hands of marge of England. Bank of England looks into many other big issues. One of the most important issues is that of ensuring monetary constancy in the economy, which can be achieved through a combination of stab le prices of goods and services across the economy coupled with a low inflation level and level of confidence of the investors in the currency of the country. The Bank comes out with the monetary policy in order to ensure a certain key objectives like, delivering price stability with a low inflation level coupled with an objective to support the Governments economic objectives of harvest and employment. Price stability is interpreted care of, by the Governments usual inflation target of 2%. There is a need to contemplate the crucial and critical role played by price stability in achieving the aforesaid economic stability, and in providing just the right conditions for a sustainable and longer living growth in output and employment. Chancellor of the Exchequer announces the Governments inflation target every year in the annual Budget statement. Though The 1998 Bank of England Act enables it to set interest rates independently, however, The Bank does hold accountability to the parlia ment and the wider public, which can not be refrained from. The legislation provides the government the power to appreciate the bank on the interest rates issues for a limited period