Lord Myners – 2015 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Lord Myners on 2015-02-10.

To ask Her Majesty’s Government whether they have plans to consider setting the inflation target over an extended period, rather than a single year, in order to allow some catch-up for an extended period of under-target outcomes.

Lord Deighton

The Bank of England Act 1998 requires the Treasury to specify the objectives of the Monetary Policy Committee, namely what price stability is taken to consist of and the Government’s economic policy objective at least once every 12 months.

At Budget 2013, the Government reviewed the UK’s flexible inflation targeting monetary policy framework in international and historical context.

Based on the assessment set out in the review, the Government believes that low and stable medium-term inflation is a necessary, though not sufficient, pre-requisite for economic prosperity. As a result, in the remit for the independent Monetary Policy Committee of the Bank of England, the Government has retained a flexible inflation targeting framework and reaffirmed the 2 per cent Consumer Prices Index inflation target, which applies at all times. The Government updated the remit to clarify the trade-offs that are involved in setting monetary policy to meet a forward-looking inflation target.