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EconToMarks

Topic / economics

Monetary Policy

Interest rates, central-bank decisions and how policy reaches the real economy.

Core exam brief

Know the idea before you use the evidence.

Definition

Monetary policy uses interest rates and other central-bank tools to influence inflation, demand and financial conditions.

Chain of analysis

A rate rise tends to raise borrowing costs, weaken consumption and investment, reduce aggregate demand and ease inflationary pressure.

Evaluation trigger

Transmission is delayed and depends on confidence, debt exposure, exchange rates and the source of inflation.

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Bank of England holds Bank Rate at 3.75%

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Analysis and example bank

29 July 2026 · United Arab Emirates

UAE keeps Base Rate at 3.65% under the dirham's US dollar peg

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30 July 2026 · United Kingdom

Bank of England holds Bank Rate at 3.75%

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The HM Revenue and Customs building seen from Parliament Square in London

19 August 2026 · United Kingdom

UK CPI inflation rises to 2.9% in July 2026

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A shopper placing fresh produce into a supermarket trolley