Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the impact of the recent strengthening in sterling on inflation in the UK; and what assessment they have made of the effect this may have on the timing and magnitude of monetary policy adjustments made by the Bank of England.

The Office for Budget Responsibility (OBR) is the government’s official forecaster. They published their latest assessment of the economic and fiscal outlook (EFO) on 6^th March. The OBR noted that the trade weighted sterling effective exchange rate had strengthened by around 2 per cent since their November 2023 forecast. Inflation has halved since its peak in October 2022 and was 4.0% in January 2024. In the March EFO, the OBR note that inflation has fallen more sharply than they expected in November, and now expect inflation to fall below 2% in Q2 2024 – a year earlier than previously expected.

Monetary Policy is the responsibility of the independent Monetary Policy Committee of the Bank of England. Therefore, it is right the Government does not comment on the conduct of monetary policy.