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April 20, 2013 12:53 am
The Treasury select committee will add to the chancellor’s woes on Saturday with a report taking issue with George Osborne’s decision to tweak the Bank of England’s monetary policy remit without a proper debate.
MPs on the committee were surprised that the chancellor used last month’s Budget to announce changes to the remit, which gives the bank more flexibility to spur growth so long as inflation remains under control.
“Maybe we missed the debate,” said one committee source.
Rupert Harrison, Mr Osborne’s chief aide, took soundings on Britain’s monetary policy framework during a US tour this year but little formal debate took place in Britain.
Mark Carney had called for a debate on the remit during his maiden hearing in front of the MPs this year, though the incoming governor stressed that any changes should be applied quickly to avoid uncertainty on monetary policy.
Andrew Tyrie, chair of the committee, said: “The main concern is that you have to be clear there is something to solve before you change the remit.
“Every time you change the remit you put credibility at risk. It takes time to build up and it’s quick to lose,” he said.
The committee is expected to call Mr Carney to give evidence on how he intends to use the added flexibility that the remit offers the Monetary Policy Committee.
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