Written question asked by Lord Barnett (Labour) on Wednesday, 16 July 2014, in the House of Lords. It was due for an answer on Wednesday, 30 July 2014. It was answered by Lord Deighton (Conservative) on Monday, 28 July 2014 on behalf of the Treasury.

Exchange Rates

Question: To ask Her Majesty’s Government what assessment they have made of the impact of the exchange level of sterling on the United Kingdom’s economic recovery.

Answer: The UK does not have an exchange rate target. The UK’s monetary policy framework, set out in the Bank of England Act 1998, gives operational responsibility for monetary policy to the independent Monetary Policy Committee (MPC). The MPC has the primary objective of maintaining price stability, defined as an inflation target of 2 per cent as measured by the twelve month increase in the Consumer Prices Index. Under the Government’s macroeconomic framework, the exchange rate is allowed to adjust flexibly, and movements in sterling are determined by market forces.

Secondary information