The Bank of England and Federal Reserve's Ability to Wait for Inflation

The video discusses the potential impact of a no-deal Brexit on interest rates, suggesting that the Bank of England might be forced to hike rates due to a pound crash and imported inflation. It explores differing opinions on the Phillips Curve's relevance, with some arguing it remains valid while others see it as flat. The discussion also covers the risk-free rate in investments, emphasizing the need to keep interest rates low to avoid market disruptions.

What might force the Bank of England to increase interest rates in the event of a no-deal Brexit?

• An increase in exports

• A pound crash and imported inflation

• A decrease in inflation

• A stable pound

What is the Phillips Curve primarily concerned with?

• The effect of fiscal policy on economic growth

• The impact of interest rates on GDP

• The relationship between inflation and unemployment

• The correlation between currency value and trade balance

According to the discussion, what is the current state of the Phillips Curve in the US?

• It is non-existent

• It is flat and less significant

• It is only applicable in Europe

• It is steep and highly relevant

What is the 'neutral rate' in the context of interest rates?

• The rate at which inflation is zero

• The rate at which economic growth is maximized

• The rate at which monetary policy is neither expansionary nor contractionary

• The rate at which unemployment is minimized

Why is it important to keep interest rates low according to the discussion?

• To increase the value of the currency

• To encourage deflation

• To prevent market disruptions and support economic stability

• To maximize government revenue