To combat persistent inflationary pressures, the Bank of England's Monetary Policy Committee votes to increase the Bank Rate by 50 basis points and accelerate its asset sales (Quantitative Tightening). Simultaneously, the Chancellor of the Exchequer announces a reduction in the basic rate of income tax and an expansion of public investment in transport infrastructure, leading to a projected increase in the budget deficit.
It can be inferred from this scenario that
both monetary policy and fiscal policy are contractionary.
monetary policy is contractionary whilst fiscal policy is expansionary.
monetary policy is expansionary whilst fiscal policy is contractionary.
both monetary policy and fiscal policy are expansionary.
