Economy: Monetary and Fiscal Policy

Lord Taverne Excerpts

Tuesday 8th November 2011 Lords Chamber

[Lord Sassoon]

My Lords, I will let the noble Lord, Lord Eatwell, read the actual words in Hansard tomorrow. [Interruption.] No, I am not changing anything. The MPC has to take account of the prospects for growth and inflation when it is judging how to set the direction of monetary policy. Its target is an inflation target, but it needs to take account of a wealth of other factors when making its decision, so that is what it does.

[Lord Taverne]

My Lords, do the Government not agree that in the present circumstances a simultaneous policy by many countries of rigid deficit reduction and fiscal contraction carries the danger of leading to depression, which will not cure the deficit?

[Lord Sassoon]

My Lords, I certainly agree that different countries should be taking different tracks, depending on their particular deficit and debt positions. I can only quote the concluding statement of the IMF, in its recent assessment, that:

“The current policy mix of tight fiscal and loose monetary policy remains appropriate”.