... abroad, the path of fiscal policy, the state of the world economy, and the credibility of the monetary policy regime itself In order to give some broad idea of the size and time-path of the responses ... The transmission mechanism of monetary policy Introduction and summary The Monetary Policy Committee (MPC) sets the short-term interest rate at which the Bank of England deals with the money ... short-term rates, so the outcome depends upon the direction and extent of the impact of the official rate change on expectations of the future path of interest rates A rise in the official rate could,...