WBG responds to Bank of England’s decision to cut interest rates to 5%
After holding it at 5.25% since August last year, it’s good news that the Bank of England has today decided to cut the interest rate to 5%.
UK Policy Briefing
A briefing on monetary policy from the Women’s Budget Group
Decisions by central banks can reinforce or challenge existing gender inequalities because of the different positions women and men occupy in the economy.
While we recognise that high rates of inflation result in a cost-of-living crisis that harms the well-being of women, we question whether raising interest rates and calling for pay restraint are the best ways to reduce inflation that primarily stems from international rises in prices of energy and food, and corporate profiteering.
By analysing the different ways monetary policy impacts gender inequality, we propose alternative ways monetary policy can contribute to a caring and gender-equal economy.
The Bank of England should be asked to adopt policies that are consistent with no increase in inequalities, or more ambitiously with a reduction in inequalities and:
Our transformational approach would see a monetary policy that supports more public investment in services that are vital for gender equality. For example through the Bank of England buying bonds directly from the Treasury to fund public investment in social infrastructure.
A more effective coordination between monetary and fiscal policies is also key to bringing inflation down without adverse impacts on gender equality. Current inflation is not the result of too much demand created by unreasonable wages and government borrowing, but of shortages of supply and increased profits from big companies. Monetary policy should accommodate the fiscal and regulatory policies needed in the short run to reduce key prices facing women; and in the medium run to improve the supply capacity of the UK economy not only through investment in the green economy but also in the care economy.
This briefing is a summary of the main ideas from the papers by Nicolas Aguila and Jeff Powell on feminist perspectives on monetary policy, commissioned by the Women’s Budget Group in 2023.
After holding it at 5.25% since August last year, it’s good news that the Bank of England has today decided to cut the interest rate to 5%.
WBG response to findings of UN Special Rapporteur on Extreme Poverty
A recording of our event with the Independent Expert on foreign debt & human rights
Join us for a lively discussion as our panelists explore the ways that an intersectional feminist approach could fundamentally reshape the economy