Written question asked by Lord Barnett (Labour), in the House of Lords. It was answered by Lord Sassoon (Conservative) on Monday, 7 March 2011.

Banking

Question: To ask Her Majesty’s Government, further to the answer by Lord Sassoon on 16 February (Official Report, col. 647) which said that it was for the Bank of England to make any proposals on quantitative easing and then the Chancellor will look at them, whether the Chancellor will follow the policy of his predecessor who said they would not use his powers in that respect.

Answer: The independent Monetary Policy Committee (MPC) of the Bank of England has operational responsibility for monetary policy. The MPC decides on use of measures, including the asset purchase facility (APF), in order to target 2 per cent inflation, as measured by the 12-month change in the consumer prices index (CPI). The framework for the APF, which enables it to be used as a monetary policy tool, was set out in the exchange of letters on 17 February and 3 March 2009 between the governor and the then Chancellor of the Exchequer. The framework requires the Chancellor to authorise the overall limit on asset purchases. Open letters exchanged between the then Chancellor and the governor agreeing the limit for APF purchases can be found on the Bank of England website.

Secondary information

Type: Written question
Reference: 7239; 725 c366WA
Session: 2010-12
Related items: Monetary Policy Committee
Wednesday, 16 February 2011
Oral answers to questions
House of Lords; Monetary Policy Committee
Wednesday, 16 February 2011
Oral questions
House of Lords
Subjects: Bank of England Monetary policy Treasury
Link: View this Written question on www.publications.parliament.uk