Written question asked by Lord Dykes (Liberal Democrat), in the House of Lords. It was answered by Lord Myners (Labour) on Wednesday, 17 December 2008.

Inflation

Question: To ask Her Majesty's Government what discussions they will hold with the Bank of England on countering any future rise in inflation resulting from any reduction in the base rate.

Answer: Interest rates are set by the Monetary Policy Committee (MPC) of the Bank of England, to meet the Government's inflation target of 2 per cent, as measured by the 12-month increase in the consumer price index. It is not the Government's policy to comment on or have input into individual interest-rate decisions taken by the Monetary Policy Committee of the Bank of England. To do so would compromise the arrangements for independence of the Bank of England that the Government put in place in 1997 and would squander the credibility gains that have resulted from those arrangements.

Secondary information