Inflation

Lord Spicer Excerpts

Wednesday 19th January 2011 Lords Chamber

Asked By

[Lord Spicer]

To ask Her Majesty’s Government what plans they have to reduce the rate of inflation.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the UK’s monetary policy framework gives operational responsibility for maintaining price stability to the independent Monetary Policy Committee of the Bank of England. The MPC stated in the minutes of its December 2010 meeting that its central view remained that a substantial margin of spare capacity in the economy was likely to persist for some time and would bear down on inflation in the medium term as the impact of temporary factors waned.

[Lord Spicer]

I thank the Minister for that reply. Now that the consumer prices index has risen to almost twice the Bank of England’s target inflation figure, will the Government consider exchanging quantitative easing for quantitative tightening?

[Lord Sassoon]

My Lords, of course the Government are concerned about the current level of inflation and the impact that it has on many parts of society, particularly on working families, savers and others. However, how the Bank of England meets the Government’s set target for inflation, including decisions about what it does, if anything, about quantitative easing or the reversal of it, is an operational decision for the bank.