'Some of the Risks Identified by the Mpc Have Started to Materialise' ; Bank of England the Text of the Letter Sent by Bank of England Governor Mervyn King to Chancellor Gordon Brown, with Mr Brown's Response

Birmingham Post › April 18, 2007

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Summary

The CPI inflation rate for March, to be published at 9.30am tomorrow by the Office for National Statistics, is 3.1 per cent. That is more than one percentage point above our target of two per cent. Under the terms of the remit you have given us, I am, therefore, writing an open letter to you today, on behalf of the Monetary Policy Committee, to explain why inflation has risen above target and what we propose to do about it. As requested by the National Statistician, in order to avoid conflict with the release of an official statistic, in this case the CPI, the Bank of England is publishing this open letter at 10.30am.

Before coming to the inflation figures, let me recall the background to this letter. The 1998 Bank of England Act sets out the objectives of the Monetary Policy Committee.

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Extract

'Some of the Risks Identified by the Mpc Have Started to Materialise' ; Bank of England the Text of the Letter Sent by Bank of England Governor Mervyn King to Chancellor Gordon Brown, with Mr Brown's Response

They are to maintain price stability and, subject to that, to support the economic policy of the Government, including its objectives for growth and employment.

When you wrote to me on 21 March this year, you confirmed that the remit for the Monetary Policy Committee would remain unchanged and that the price stability objective remained a target for inflation, as measured by the 12-month increase in the Consumer Price Index, of...

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