Price stability here is defined on the basis of the “understanding of medium- to long-term price stability” (hereinafter, the “understanding”) announced by the Bank and refers to the level of inflation that each Policy Board member understands, when conducting monetary policy, as being consistent with price stability over the medium to long term, with each Policy Board member’s “understanding” falling in a positive range of 2 percent or lower, and the midpoints of most Policy Board members’ “understanding” being around 1 percent.
In the case of the United Kingdom, it was necessary for the Bank of England to provide emergency liquidity assistance to one financial institution, Northern Rock. As central banks rarely provide this kind of assistance easily to one institution, financial markets will continue to keep a watchful eye on possible subsequent developments in the United Kingdom.