Economy: Inflation

Lord Lawson of Blaby Excerpts

Tuesday 11th March 2014 Lords Chamber

[Lord Newby]

My Lords, the noble Lord knows that this Government and the previous Government decided to move to CPI from RPI as a measure of inflation simply because we believe it is a more appropriate way of measuring inflation. It is as straightforward as that. Everyone who is affected by CPI rather than RPI will be affected by a better measure of inflation.

[Lord Lawson of Blaby (Con)]

My Lords, while the operational independence of the Bank of England on monetary policy is of the first importance, would my noble friend consider saying gently to the governors that their authority would be greater and the effectiveness of monetary policy enhanced if they were to talk rather less about matters that are market sensitive?

[Lord Newby]

There is a tension as far as the Bank of England is concerned. If it does not say anything it is criticised for not giving any indication of what it thinks; and when it does say something, it is criticised for saying what it thinks. That is an inevitable problem. On balance, it is better to have the governor and other members of the senior management of the Bank of England explaining what they think is happening to the economy, what they are doing and why they are doing it.