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Monetary Policy - Inflation - Cures
Theories
The appropriate cure for inflation depends on what the cause is. The aim of the Monetary Policy Committee is to keep inflation to the target level set by the government, but the government themselves can also use their policies to try to keep inflation under control. Follow the links below to get more detail about the potential cures that are available.
- Monetary and other targets - targets can be set for various variables to help set policy.
- Control of the money supply - a variety of techniques are available to try to control money supply growth, though they are not currently used by the Bank.
- Demand-side policies - if the level of demand is growing, then it will be necessary to use policies that control it. These are known as demand-side policies.
- Supply-side policies - if the economy is constantly coming up against supply constraints, then supply-side policies to boost capacity may be necessary.
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