Monetary Policy Committee: Inflation

Lord Lawson of Blaby Excerpts

Wednesday 13th February 2013 Lords Chamber

[Lord Deighton]

I do not really want to get into a semantic argument about the definition of flexibility, and I do not know whether it appears in the original Act. However, to my simple understanding, the remit and the MPC’s behaviour clearly demonstrate significant flexibility, which is what you would expect in a policy tool to cope with our difficult and challenging economic circumstances.

[Lord Lawson of Blaby]

I support my noble friend the Minister in everything that he said and I greatly look forward to the court case which the noble Lord, Lord Peston, is about to bring against the Bank of England. I am sure that that will give us great entertainment value. Is my noble friend aware that to jettison the inflation target at this time or at any other time would mean a loss of financial market credibility and a loss of political credibility for no gain whatever?

[Lord Deighton]

I thank my noble friend for his expert endorsement. He is absolutely right: our inflation target has served this economy extremely well. The Chancellor and the incoming governor as well as the existing governor have been clear that it would take a very high hurdle to climb over to find a better structure than the one that we currently have.