Monetary Policy Committee

Lord Davies of Stamford Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Lea of Crondall]

My Lords—

[Lord Davies of Stamford]

Does the Minister agree that, although the Monetary Policy Committee has a single target imposed on it—the 2 per cent inflation target—in practice it has been behaving as though, like the Federal Reserve, it has a multiple target, with responsibility not merely for price stability but for stabilisation or employment? It may be a very good thing that the Bank of England has not been increasing interest rates, as it might have done if it had been following a single price stability target over the past couple of years, but are the Government not concerned at the discrepancy between the formal position and the actual practice on which our monetary policy is currently based?

[Lord Sassoon]

My Lords, I refute that suggestion completely. The Bank of England Monetary Policy Committee is following to the letter not only the direction of the Chancellor in terms of the target but also what it is obliged to do under Section 11 of the Act, and that is what it continues to do.