Letter: Wrong target

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The Independent Culture
Sir: The Bank of England in July came within a hair's breadth of hitting its inflation target (report, 19 August). Clearly, the agony suffered by the Bank as well as the rest of us, in pursuit of that target has not been in vain.

Yet, while I am second to none in stressing the importance of maintaining price stability and avoiding the periodic overheating that drives the boom-bust cycle, which the Chancellor who laid down the target is seeking to abolish, would it really be a huge disaster if the target in question was not hit as accurately and consistently as it is intended to be?

After all, there is no special logic in the target figure (or, as we must now call it, "number") selected, or in the "underlying" (excluding mortgage interest payments, but not likewise administered indirect taxes) rather than "headline" (telling it as it is) inflation measure. A different figure could also be justified. And since targeting inflation is not unlike a rolling ship shooting at a moving target in fog, an altogether different target (say, money supply) might be more suitable.


London N3