Bank of England: Monetary Policy

Lord Hughes of Woodside Excerpts

Tuesday 19th March 2013 Lords Chamber

[Lord Newby]

My Lords, when the previous Government established the independent Monetary Policy Committee, they decided not to follow the remit given to the Fed. No Chancellor since 1997 has decided to change that remit.

[Lord Hughes of Woodside]

My Lords, has the Minister noticed that the Deputy Governor of the Bank of England has floated the idea that banks should be entitled to charge negative interest on savings? Even the new Governor of the Bank of England, when he was in Canada, was apparently within days of allowing such a policy. This would be immensely damaging to savers. Will he put this to rest, immediately and unequivocally, and say that there is no possibility of the Government sanctioning any such idea?

[Lord Newby]

My Lords, an awful lot of ideas have been floated recently but the key remit for the Bank of England is set by the Chancellor. Within that, the Bank has operational independence on how it follows that remit. The remit has not changed but the Bank of England, with or without a new governor, always looks at questions in the general area of monetary activism.