Chancellor admits ‘debate going on’

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George Osborne has acknowledged there was a “debate going on” about the future of monetary policy amid claims that the Government could ditch the Bank of England’s two per cent inflation target.

The Chancellor insisted he had “no plans” to change the current regime and would only do so if there were to be “very significant rewards” for doing so. But, appearing before MPs on the Treasury Select Committee yesterday, he appeared to hold open the door to such a move.

There have been reports that ministers are considering giving the Bank of England a new target to promote growth in what would be a major shift of focus for interest rate-setters on the Monetary Policy Committee.

Mr Osborne said: “We have an inflation-targeting regime which has served this country well and provided stability. There is a debate about the future of monetary policy, not in the UK exclusively but in many, many countries.”

Mr Osborne said there was “innovative stuff happening around the world”, and incoming governor of the Bank of England Mark Carney was “part of that debate”.