| The Bank of England (formally the Governor and | | | | England that it is involved in managing monetary policy. |
| Company of the Bank of England) is the central bank | | | | So specifically, the MPC monetary policy committee is |
| of the entire United Kingdom, and its importance has | | | | accountable for changing interest rates, in order to |
| increased because of the model on which a lot of | | | | keep inflation within the target of CPI 2% +/-1 of the |
| modern and large central banks have been created. It | | | | government. To attain this inflation goal, the MPC meet |
| established in 1694 to act as an English Government | | | | every month and observe future inflation trends. If |
| bank. From that day it is still working as the banker for | | | | inflation is expected to increase in future, they will vote |
| the UK Government. The Bank was privately owned | | | | to raise interest rates in order to dampen demand. |
| and operated from its foundation in 1694, and it was | | | | They do not frankly set mortgage rates, but indirectly |
| nationalized in 1946. | | | | they do manipulate mortgages through the setting of |
| Central bank is working as the banker of all the banks | | | | interest rates. |
| in the UK, and all the banks in the United Kingdom are | | | | The Bank of England, in reality, set the base rate of |
| working under the guidance of bank of England. Its | | | | repo charge. This is a price at which they provide loan |
| importance has increased with the passage of time. | | | | to the commercial banks. They try to remain the banks |
| The Bank of England works for the development of | | | | short of liquidity so that they often have to borrow on |
| UK. It has major importance in economy because it | | | | this repo rate. If this repo rate changes, the commercial |
| issues notes and coins in the country. | | | | banks usually pass the changes on to their customers |
| The role of bank of England is termed as manager of | | | | by changing their individual interest rates. |
| the debt of the government. It shows how much | | | | Bank of England plays a vital role as lender of last |
| important it is to consider the services of central bank | | | | resort. If the commercial banks are short of cash, they |
| for the development of country. For this purpose of | | | | go to the Bank of England, who is capable and ready |
| managing the government debt, the bank of England | | | | to lend them money. This is an important feature that |
| usually sell bonds and gilts to the private sector. Usually, | | | | is only handled by bank of England. It ensures the |
| bonds have an annuity of about 30 years. In order to | | | | banks are never short of cash; so, people have trust |
| motivate people to buy government debt, they need to | | | | on the banking system. The Bank of England controls |
| suggest an attractive interest rate. Interest payments | | | | the banking and financial system of the UK Financial |
| on UK debt amount to nearly £30 billion a year. | | | | stability. |
| This is one of the very important roles of bank of | | | | |