Homework Help: Economics

Posted by Molvis on Monday, February 5, 2007 at 4:45pm.

When the Bank of England cut interest rates does that mean inflation is reduced??

No.
When the Central Bank cuts interest rates, it is interested in "spurring" the economy by lowering the cost of capital and thus causing more private investment. While certainly unintended, increasing total demand might cause some increase in the price level.

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