Base rate remit change call rebuffed
A call to suspend the Bank of England's interest rate target has been rejected by chancellor of the exchequer Alistair Darling.
At the weekend Vince Cable, the Liberal Democrat treasury spokesman, said Mr Darling should suspend the instruction that the Monetary Policy Committee (MPC) should set interest rates in the way that is best to achieve consumer prices index inflation of two per cent.
By doing this it would "clear the way" for a major boost to the economy through a large rate cut, Mr Cable said.
However, Mr Darling rejected the idea, commenting: "That remit was designed to deal with difficult times as well as the good times."
This may mean that the MPC may still decide to hold interest rates this week, or only reduce them by 0.25 per cent.
Such decisions could have little impact on the cost of mortgages in London, meaning those wanting to live in the capital could remain better off renting.
An Adfero poll on the MPC decision this week was split, with five experts saying the rate will remain on hold and seven predicting a 0.25 per cent cut.
Published 6th October, 2008
© 2008 Estates IT Limited
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A call to suspend the Bank of England's interest rate target has been rejected by chancellor of the exchequer Alistair Darling.