Who sets the UK's official base rate of interest?

• A. Chancellor of the Exchequer
• B. Financial Policy Committee
• C. Monetary Policy Committee
• D. Financial Conduct Authority

Answer: (C)

The official UK base rate is set by the Bank of England’s Monetary Policy Committee. They meet regularly to decide the Bank Rate, which acts as the official cost of borrowing and influences the rates that banks charge customers. Their objective is to keep inflation close to the target, typically 2%, so the rate decision reflects macroeconomic conditions rather than political direction. The Chancellor handles fiscal policy, not the interest-rate setting. The Financial Policy Committee focuses on financial stability and macroprudential policy, not the base rate, while the Financial Conduct Authority regulates markets and conduct. So the Monetary Policy Committee is the correct body because it directly controls monetary policy and the base rate.