Monetary policy has some important limits when it comes to fixing economic inequality. Let’s break it down:

1. Interest Rates:

   • Low interest rates help people who borrow money, but they can hurt those who save. For example, from 2009 to 2016, the Bank of England kept interest rates very low, around 0%. This helped people who had debts but didn't help those trying to save money.

2. Rising Asset Prices:

   • Certain policies, like quantitative easing, have made prices for things like stocks and real estate go up. In the UK, the richest 10% of people own 45% of all the wealth. So when prices rise, it mainly helps them even more.

3. Inequality in Benefits:

   • The way monetary policy works doesn’t help everyone equally. Small businesses often get loans with higher interest rates. So, even if the central bank lowers rates, these businesses might not see the benefits. This can slow down fair growth.

4. Trust in Policy:

   • If people don’t believe that monetary policy will work, they might not spend money even if they should. In July 2022, consumer confidence in the UK dropped to -27, which meant that any monetary policy improvements had less effect.

These points show how limited monetary policy is when it comes to reducing economic inequality.