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Global economy supplement: raise rates now

Monetary policy should be used to slow the economy, not stop it

By Marian Bel  

As with the United States, attention has turned to the timing of the first interest rate increase in the United Kingdom; to how far and how fast rates will rise, and what the impact on the economy will be.

The Monetary Policy Committee (MPC) of the Bank of England, which sets rates, responded to the financial crisis and the subsequent deep and prolonged recession by sharply reducing the bank’s interest rate to a historically low 0.5 per cent, and by buying £375bn of assets from the non-bank private sector, in a process known as quantitative easing. The aim was to…

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