Money and credit key to predicting economic changes, new study finds.
The article explores how changes in interest rates affect inflation in the UK. By analyzing different sectors separately, the researchers found that monetary policy doesn't have a direct impact on output in the long run. It takes at least 18 months for changes in interest rates to affect prices. Also, using sector-specific measures like bank deposits for companies and bank credit for individuals gives a clearer picture of how monetary policy influences the economy.