Question to the HM Treasury:

To ask Her Majesty's Government what, if any, plans they have to give the Monetary Policy Committee greater freedom in the interpretation of that Committee’s inflation target following the lifting of the restrictions in place to address the COVID-19 pandemic.

The remit of the MPC is set by the Chancellor and is reaffirmed yearly through a letter to the Governor of the Bank of England. It was updated at Spring Budget 2021. The remit re-confirms the inflation target for the MPC as 2 per cent as measured by the 12-month increase in the Consumer Prices Index (CPI). This reflects the primacy of price stability and the forward-looking inflation target in the monetary policy framework. The Government’s commitment to price stability remains absolute.

The MPC’s remit already provides flexibility around the inflation target, allowing inflation to deviate temporarily in circumstances where attempts to hit the target may cause undesirable volatility in output or exacerbate financial stability risks.