Monetary and fiscal policies Summary

Monetary and fiscal policies

The monetary policy, which is decided by the government, is a key factor that influences the macro environment in the United Kingdom. The monetary policy is a measure that centres around the interest rates and access to credit. Therefore Federal interest rates are one of the main providers of monetary policy tools (Dashutina and Litvinova, 2021). This will affect the activities of the company where they borrow from each other at a rate which is known as a base rate for all the credit activities in the market. Hence the tightening of monetary policy or an increase in the base rate can have a significant impact on the organisation’s future activities. Similarly, the fiscal policy of the government relates to taxation and borrowing, where high tax rates can reduce the business incentive to work and save (Ulubeyli et al., 2021). Hence, the Government policies in order to stimulate economic activity will affect Tesco PLC performance in the future. 

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