§ Mr. MitchellTo ask the Chancellor of the Exchequer on what basis he set an inflation target of 2.5 per cent. for the Bank of England, Monetary Policy Committee; what plans he has to review that target rate; and what assessment he has made of the effect of that rate on the exchange rate. [39572]
§ Mrs. LiddellThe Chancellor set out the basis of the 2½ per cent. inflation target in his remit for the Monetary Policy Committee and the Mansion House speech on 12 June 1997. He noted that the inflation target will be confirmed in each Budget. The UK's inflation rate relative to that in other countries is only one of a range of factors that influence the exchange rate.