All in New Economics Foundation

The Bank of England’s policy toolkit needs urgent updating in light of the climate and cost of living crises. There are multiple interest rates across the economy that may need to be targeted separately to achieve monetary and financial stability and wider ecological and democratically defined goals. With the bulk of macroeconomic demand management relying on a blunt single interest rate tool, green targeted credit policy interventions would enable the Bank to better realise its price and financial stability objectives and could help it better reflect the importance of environmental sustainability and the transition to net zero, as recently mandated by the UK government.