Truss Sets 2.5% Growth Target for UK, Vows to Review BOE Mandate
Comment of the Day

July 29 2022

Commentary by Eoin Treacy

Truss Sets 2.5% Growth Target for UK, Vows to Review BOE Mandate

This article from Bloomberg may be of interest to subscribers. Here is a section:

Speaking to Conservative Home, she said the mandate “was set in 1997 in completely different times, and one of the issues round controlling inflation is around monetary policy, and that’s not just about interest rates, it’s also about quantitative easing.”

“I haven’t made any decisions … but I think it’s important that we review our monetary policy settings and make sure it is delivering for the times we’re in now. And of course inflation is a major concern for people.”

She stressed that a mandate review would not impinge on the BOE’s independence to set policy. The BOE itself was planning to look at options in early 2020 before the pandemic, and both the US Federal reserve and the European Central Bank made remit changes in 2020.

“Are we really saying that the mandate Gordon Brown set in 1997 is fixed in stone forever? I mean that seems an extraordinary claim,” Truss said.

“It’s always been the case that the Bank of England operate within the mandate set by the chancellor. And what I’m saying is that should be reviewed.”

Eoin Treacy's view

The most basic lesson successful politicians learn is to give the people what they want. That generally means more perks, spending and social programs. That’s especially true when inflationary pressures are high, and many people are worried about paying for basic necessities. Rishi Sunak is behind in the race for Prime Minister, and it is no coincidence he is running on a program aimed at responsible spending. Liz Truss has the benefit of being a relative outsider. She is opining on a wide array of topics, but the primary theme is more spending.

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