The £1.5tn Question
The Treasury opened the door to a more aggressive monetary policy on Wednesday, as aides to the chancellor welcomed the next Bank of England governor’s radical views on stimulus measure for flagging economies.
In a speech on Monday, Mark Carney suggested setting targets for the overall size of the economy, or nominal gross domestic product, rather than inflation. While Treasury officials said there were currently “no plans” to ditch the BoE’s 2 per cent inflation target, a spokesman for George Osborne added that “there’s quite a lot of interest in what he has to say … It reaffirms the fact that he is the central banker of his generation.”
Mr Osborne’s aides added that the chancellor was well aware of Mr Carney’s views on inflation targeting when he was appointed.
This is a gem:
Alistair Darling, former Labour chancellor, said on Wednesday he had considered changing the 2 per cent inflation target while at the Treasury, but was overwhelmed by other aspects of the financial crisis.
Darling didn’t find time to stop and deal with UK demand policy during the biggest UK demand crisis since the 1930s? Never mind eh, what’s the worst that could happen? Oh, wait.