New Governor New Target New Policy?

The next Governor of The Bank of England Mark Carney has raised the possibility that The MPC might target GNP rather than inflation

Carney in one of his final speeches at The Bank of Canada, implies that Central banks should be prepared to ditch inflation targets in the event of sluggish growth and instead set themselves the task of raising national output.


It remains to be seen if this becomes a break with the 2% inflation target, which has been a feature of UK monetary policy over the last 15 years. Carney might be signalling a new approach to break the economic logjam.

It is worth considering the pros and cons of a shift in the focus of UK macroeconomic policy, the impact on expectations and economic behaviour.

On December 14th The BBC's Economics Correspondent, Stephanie Flanders weighs up the arguments and points out that critics point out that a change of target, might mean "that the Bank of England would be giving the mistaken impression that it can control economic growth when it can't." It could also mean that growth was being encouraged with little regard to the inflationary impact on the macroeconomy.


Job board

Teacher of Economics

International School of Milan, Milan, Italy

Teaching Vacancies

Recruitment

Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u