Bank of England

Lord Forsyth of Drumlean Excerpts

Tuesday 22nd January 2013 Lords Chamber

[Lord Newby]

My Lords, the Government do not put the needs of the credit rating agencies first. The Government are seeking to promote growth within a stable framework while reducing the deficit. We do not know what the credit rating agencies are going to do, but I can assure the noble Lord that people in the Treasury are not spending every night awake worrying about them. They are expending their efforts on promoting growth on the basis of a reducing budget deficit and a credible long-term macroeconomic policy.

[Lord Forsyth of Drumlean]

My Lords, is it not obvious to everyone that inflation targeting has failed? The Bank of England has consistently failed to meet its inflation targets and we have zero growth in the economy. Would it not be sensible for the Government to listen to Mr Carney’s suggestions?

[Lord Newby]

My Lords, the Government will listen to Mr Carney’s suggestions. Mr Carney has said that he will not comment on the position in the UK until he arrives. His key speech on this issue was made in February last year before he was appointed. In that speech, he said among other things that,

“if nominal GDP targeting is not fully understood or credible, it can, in fact, be destabilizing”.

There is no quick and easy answer—