The MPC adjust its quantitative easing and interest rate policy in line with an inflation target of 2% and an unemployment target of 7%. In 2015 the UK economy was operating well below both targets, indicting that further monetary easing can be expected to stimulate aggregate demand.

Quantitative easing (QE) occurs when the Bank buys back government debt (sometimes called bonds or gilt-edged stock) from the banking sector. Since 2007 the central bank has made £375bn of such asset purchases. Banks, which before had held government bonds, now have £375bn more cash to lend out should they so wish.

As confidence in future growth grows, so the banking system, criticised for its weak support of the supply side through its weak investment lending in 2015, should help stimulate further investment for growth. And as investment picks up, so any inflationary pressures building due to demand side rises in consumer spending should be offset by an increase in UK productive capacity.