§ 5. Mr. SutcliffeTo ask the Chancellor of the Exchequer what steps he is taking to ensure that the Government's monetary policy objectives are met. [1589]
§ Mr. Gordon BrownLast month I announced reforms which gave the Bank of England operational responsibility for setting interest rates. Today, I have written to the Governor setting out the Bank's remit and how it will be held accountable for meeting its target.
To meet the Government's objectives of high levels of growth and employment, we need consistently low inflation. That is why I am today announcing a precise and rigorous framework to achieve the Government's inflation target of 2½ per cent.
Our new long term framework will ensure that if inflation is 1 per cent. higher or lower than this target, an open letter will be sent by the Governor to the Chancellor so that the public is fully informed of why the divergence has occurred and what steps will be taken in response.
I have arranged for the letter which I have sent the Governor today to be placed in the House of Commons Library.