The Impact of Steady Increase in the Interest Rate in the UK Coursework

The Impact of Steady Increase in the Interest Rate in the UK - Coursework Example These effects caused by a low inflation, low interest, but highly tax economy are the outcomes that are current and continuing to thwart economic competitiveness and equilibrium across the UK manufacturing base. This assignment, therefore, seeks to consider some of the reasons for the causes and effect of an increase in interest rates that are now providing causal effects across the economy. In particular the economy of the USA, that has been a focus of concern across financial sector industries in the UK. Commenting on the effect that world interest rates have on domestic interest rates, Mr King said that: â€Å"We look at the balance between demand and supply, we ask ourselves what goes into that balance and there is no doubt that what is happening in the rest of the world is a key input into that assessment. However, the way in which overseas interest rate changes affect our judgment is solely as an input into that judgment.† â€Å"†¦all central banks are very clearly focused on meeting their own price stability objectives. Of course, they take the rest of the world into account, but they do not say ‘Oh gosh, Jean-Claude has put up interest rates, perhaps we ought to keep up with him’; it is not like that† (House of Lords 2006 p.10). Therefore, the economics of equilibrium is a force that has to be recounted in that the elasticity of the economy is a crucial aspect of financial housekeeping in all World economies and despite the fact, an economy must predominately consider its own fiscal policies, rather than being affected by other economic decisions.