Freedom beckons

20 March 2013 By Edward Hadas

The Bank of England is printing money and tolerating above-target inflation. Until now, this arrangement was considered exceptional. Under the BoE’s new remit, announced in the budget, it will count as pretty much normal. It’s an invitation to an inflationary adventure.

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Regions

UK budget takes two steps forward and one back

Context News

In his March 20 budget speech, George Osborne, the UK Chancellor of the Exchequer, said, “I am today setting out an updated remit for the Monetary Policy Committee … The updated remit re-affirms the inflation target as 2 percent as measured by the twelve month increase in the Consumer Prices Index … The new remit explicitly tasks the MPC with setting out clearly the trade-offs it has made in deciding how long it will be before inflation returns to target.
“The new remit also recognises that the Monetary Policy Committee may need to use unconventional monetary instruments … For example … making a commitment to keep interest rates low while unemployment is high, provided inflation is not expected to rise too much.”

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