Macro Written Assignment Essay Example | Topics and Well Written Essays - 1500 words

Macro Written Assignment - Essay Example The latter on the other hand, augments the overall money supply in the economy more precipitously. Expansionary policies are conventionally utilized in the attempt of combating unemployment in an economic downturn. This is achieved by depressing the rates of interest with the intention of allowing easy credit to entice business expansion. Contractionary policies are expected to decelerate inflation so as to prevent the consequential distortions combined with the relapse of the values of assets (Weale, 2013). The United Kingdom public might expect a change in monetary policies because of the falling unemployment and economic recovery that the country is experiencing. The change anticipated to happen is the overhauling or revamping of the interest rate policy of the Bank of England. The interest rates are to be determined by unemployment, among other indicators. The introduction of the forward guidance policy kept the bank from increasing interest rates to beyond 0.5 per cent. The bank governor, Mark Carney, however, asserted that the policy needed revising because of the outstanding strong growth in employment. This adjustment involves rising rates of interest. This is to be done following the observation of such indicators as spare capacity within the economy, wages as well as productivity. The bank is to provide predictions on these range of indicators based on expectations of the market of 1.5 per cent increase by the year 2017. The Bank of England outlined its stratagems for alterations in rates of interest in the future. This could probably mean more suffering for the saving population but there would continue to be inexpensive mortgage rates. The Bank would only consider increasing the current low interest rate levels if either inflation or unemployment or both was no longer manageable. The stratagem or change in monetary policy known as the forward guidance would affect the main indicators in