Mpc Bank of England

At the moment the Committee main target is to maintain the inflation at 2%. There is an open debate on whether or not the BoE should have a wider scope in order to target the nominal GDP ; this could however drive away the attention of the central bank from its main goals.

The last forecast predict inflation will be above average in the Q1 (2.53) and during all the ongoing year. Inflation can suffer unexpected variation coming from external factors such as commodity markets volatility.

GDP Growth forecast has been cut for next year to about 1% from nearer 2% as British economy will be struggling during 2013.

Although interest rates are at an historical low level SME and corporate companies still face problems to access the credit they need to continue their activities. That is mainly due to the preference of banks for less risky assets at the moment, as well as for the unsecure future expectations of businesses for investing. However, the end of the year 2012 showed good signals as loans given to corporate increased significantly in the last quarter , with large and medium-sized businesses receiving the majority of the loans.

The members of the Committee have different opinions regarding the position the Bank should take on the interest rates.

Two of the members of the Committee believe that interest rates should return to more normal values and artificially low interest rates are not anymore a useful instrument, as the problem is in the demand side of the economy. The discount rate has been at a very low level for too much time and businesses are not investing because they have the expectation of interest rate to continue as low in the mid-term. Moreover, real interest rate is negative and is punishing the savers. A zero bound forward rate guidance could also be an effective tool when monitoring the inflation.

On the other hand, increasing the interest rate would