Call for debate on scrapping Britain's inflation target

Mark Carney, governor-designate of the Bank of England (above), has called for a debate on scrapping Britain’s much-vaunted inflation target, warning the government that any decision on whether to alter the monetary policy committee’s remit should be made quickly.

Inflation targeting, introduced in Britain in 1992 following a campaign masterminded by Sir Mervyn King, has been a cornerstone of economic policy around the world in recent decades.

However its credibility has been tested in recent years by the inability of central banks to prevent the financial crisis or to spearhead a strong global economic recovery.

Mr Carney, who succeeds Sir Mervyn in July, told parliament’s influential treasury select committee yesterday he considered inflation targeting the best framework for supporting the economy.

Mr Carney said the reaction triggered by his suggestion in December that central banks broach dumping their targets if a strong recovery continued to elude their economies, signalled an appetite for discussion on whether Britain’s monetary policy framework was appropriate. – Copyright The Financial Times 2013