Business

Osborne welcomes 'debate' over Bank of England role

  • 13 December 2012
  • From the section Business
Media captionGeorge Osborne: "We have in Mark Carney someone who is leading debate and opinion"

George Osborne has told MPs it is "good there is a debate" over whether the Bank of England should target economic growth as well as inflation.

The chancellor was speaking after the Bank's next governor suggested its core job could be widened to also boosting the economy rather than the current one of just keeping inflation close to 2%.

But Mr Osborne said he had no current plans to change the Bank's main role.

He said inflation-targeting had served the UK well and "provided stability".

'Significant rewards'

Speaking to the Treasury Committee, Mr Osborne said: "There is a debate about the future of monetary policy, not in the UK exclusively but in many, many countries.

"Of course any decisions about the framework are decisions for the government, a government accountable to Parliament."

The chancellor added that if the Bank was to move away from its current focus on inflation "you would want to be satisfied, and parliament would want to be satisfied, that you were getting some very significant rewards in return for moving away from that".

Mark Carney, currently the governor of the Bank of Canada, will take up the top job at the Bank of England next year, replacing Sir Mervyn King.

He made his comments in a speech on Tuesday.

Although his comments were short on detail, Mr Carney suggested that if a central bank were to set its monetary policy based on both inflation and growth, rather than solely inflation, it "could in many respects be more powerful" in helping to boost an economy, because of the increased flexibility it gave central banks.

In Mr Osborne's answers to the Treasury Committee, he added that the debate over the role of central banks was "totally to be expected after everything that has happened to the international economy, and indeed to the British economy over the last four or five years".

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