Britain's Chancellor of the Exchequer, Mr Gordon Brown, came under attack from opposition parties and City of London economists yesterday for relaxing the government's inflation target.
But he rebuffed the criticism, telling the House of Commons that "instead of an ad hoc, personalised and often chaotic system, we have introduced rules based on principles and a rigorous approach".
Mr Brown confirmed that the newly independent monetary policy committee of the Bank of England, the British central bank, would be charged to achieve 2.5 per cent underlying inflation, excluding mortgage interest payments. Previously the target was 2.5 per cent or below.
In his first speech to the Lord Mayor of London's annual dinner at the Mansion House in the City, Mr Brown said he would like to reduce the inflation target in future, if international conditions permitted.
He also hailed rigorous, precise and open procedures" which would help the Bank deliver the inflation target in the long term.
If inflation diverges from the new target by more than a percentage point either side, Mr Eddie George, the Bank's governor, will have to write an open letter of explanation.
