Vinec Cable sees merit in growth target for BoE
By Tim Castle | January 31, 2013 8:42 AM EST
Business minister Vince Cable said on Wednesday he could see some merit in incorporating growth into the Bank of England's objectives, adding his voice to an emerging debate over the bank's mandate.
"I think the argument for having growth as part of the objectives seems eminently sensible and I think it is important we have a debate on how best that should be done," Cable said in remarks at a think tank event in London.
He added it would be foolish to endorse any particular formula for the bank, which currently only targets inflation as it tries to boost an economy struggling to emerge from the "heart attack" of the financial crisis.
Incoming Bank of England Governor Mark Carney - who takes over in July - fuelled the debate last December when he raised the possibility of central banks targeting nominal gross domestic product, a mix of GDP and inflation.
Inflation has overshot the Bank of England's 2 percent goal since December 2009, and its current governor Mervyn King has said he expects this to remain the case for most of 2013.
This is in line with the bank's current interpretation of its mandate, under which it sets monetary policy to get inflation to 2 percent within 2-3 years.
Cable said the bank had shown flexibility by its policy of buying British government debt under its 375 billion pound programme of quantitative easing and effectively "putting on one side" its inflation mandate.
"We are not talking about a problem that exists today, because the Bank of England is being very flexible. The question is trying to ensure that if this crisis lingers on, that kind of pragmatism is sustained," he added.
Chancellor George Osborne has dampened expectations of any change to the mandate, saying the bank's inflation target had provided stability and that there would have be a very strong case before any decision to shift away from it.
A Reuters poll of economists this week found support for that view, with a majority in favour of retaining inflation targeting as the Bank's main policy tool, despite the strategy's role in fuelling a credit bubble that led to the 2008/9 financial crisis.
(Editing by Jason Webb)
Most Popular Slideshows
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- Kendall Jenner Could Be Next Victoria's Secret Angel [PHOTOS]
- Champions League Results: Barcelona Barely Escapes With A Win, Chelsea Fails To Hold On To The Lead [PHOTOS]
- Taylor Swift Named People's Best Dressed Stars Of 2014 [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- Google Nexus 6 Release Date on Q4 2014 Confirmed by T-Mobile Featuring Wi-Fi Calling
- Why Samsung Galaxy S5 Is Not The Best Smartphone To Purchase Now? If You Still Want To, Wait For A Month To Get It Cheap
- Apple iPad Air 2, iPad Mini 3 October Release Date Roundup: Freshly Leaked Protective Case Debuts Unique Vent Alongside Camera
- Canadian IS Jihadist Wants to ‘Play Soccer’ with Heads of US Decapitated Soldiers
- Australia Actively Rallying Support For International Coalition Against ISIS
- Warning to U.S. – ISIS Has Shot Down a Syrian Regime Fighter Jet