Bank of England

The Bank of England is the central bank of the United Kingdom. Sometimes known as the 'Old Lady' of Threadneedle Street, the Bank stands at the centre of the UK's financial system, and is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy.

The Bank has two core purposes - monetary stability and financial stability. The Bank is perhaps most visible to the general public through its banknotes and, more recently, its interest rate decisions. The Bank has had a monopoly on the issue of banknotes in England and Wales since the early 20th century. But it is only since 1997 that the Bank has had statutory responsibility for setting the UK's official interest rate.

Interest rates decisions are taken by the Bank's Monetary Policy Committee. The MPC has to judge what interest rate is necessary to meet a target for overall inflation in the economy. The inflation target is set each year by the Chancellor of the Exchequer. The Bank implements its interest rate decisions through its financial market operations - it sets the interest rate at which the Bank lends to banks and other financial institutions.


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