Budget 2013: MPC given updated remit by Chancellor

THE Bank of England’s Monetary Policy Committee was given an updated remit by Chancellor George Osborne in today’s Budget.

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The Bank move aims to create economic growth and is the first change to the Bank of England’s role since it received operational independence in 1997.

The MPC will be able to consider more than just inflation when setting interest rates. It will be allowed to consider other factors apart from inflation when setting interest rates.

Mr Osborne maintained the “primacy” of the Bank of England’s inflation target of 2%, but said the Bank would have to clearly set out the trade-offs it has made to achieve this.

He said: “It’s a central plank of our economic plan that tough and credible fiscal policy makes space for active monetary policy.”

Measures could include the MPC issuing forward guidance on the future path of interest rates.

Present governor Mervyn King and incoming governor Mark Carney had both seen and approved the remit prior to today’s Budget, Mr Osborne said.