Target Two Point Zero is an interest rate

Interest rate

An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...

 challenge in the UK set by the Bank of England

Bank of England

The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

 and The Times

The Times

The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...

.

The challenge

Target Two invites students aged 16 to 18 to take on the role of the Monetary Policy Committee

Monetary Policy Committee

The Monetary Policy Committee is a committee of the Bank of England, which meets for two and a half days every month to decide the official interest rate in the United Kingdom . It is also responsible for directing other aspects of the government's monetary policy framework, such as quantitative...

 to analyse current economic conditions in the UK and the outlook for inflation

Inflation

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

. Teams of four students must create a formal presentation that is delivered to a panel of judges from the Bank of England. The presentation must conclude with a recommendation on exactly what interest rate the team would set in order to achieve the UK government's inflation target of 2.0% CPI

Consumer price index

A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...

.

Following the initial presentation, which lasts a maximum of 15 minutes, the judges have the opportunity to ask questions about what has been said. They might ask the students to justify or clarify certain aspects of their interpretation of the economic conditions.

Structure of the competition

The Challenge has three identical rounds: regional heats, area finals and the national final. There is a sufficient time lapse between rounds to compel teams to change and update their presentation to take into account of new economic statistics, or the MPC

Monetary Policy Committee

The Monetary Policy Committee is a committee of the Bank of England, which meets for two and a half days every month to decide the official interest rate in the United Kingdom . It is also responsible for directing other aspects of the government's monetary policy framework, such as quantitative...

’s own interest rate decisions.

External links

• http://www.bankofengland.co.uk/education/targettwopointzero/index.htm
• http://business.timesonline.co.uk/tol/business/economics/target_2_0/