New growth strategy 'will stoke inflation'

A member of the Bank of England's Monetary Policy Committee has warned that suggested changes to the Bank's mandate to target growth risk stoking a damaging outbreak of inflation.

In an interview with The Independent, Martin Weale argues that "in the present circumstances", where inflation has been higher than the Bank's official two per cent target for several years, the negatives of switching to a so-called NGDP target outnumbered the positives. "Given where we've been recently it would be very surprising if inflation expectations didn't pick up on the back of that," he said.

The incoming Governor, Mark Carney, suggested in a speech last month that troubled economies might benefit if their central banks adopted an NGDP target. The Chancellor, George Osborne, said he welcomed a debate on the issue.