MEP: Next BoE governor must control inflation or resign
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Conservative MEP Syed Kamall says the next Bank of England governor should have to bring inflation in line with the Bank’s 2 per cent target within 12 months or resign.
Writing in City A.M, Kamall, who is a member of the European parliament’s economic and monetary affairs committee, says inflation has too often been above target.
He says in the year after the Bank was given its independence in 1997, its then target of 2.5 per cent RPI was missed in every month but one. He adds that in response, then Chancellor Gordon Brown changed the target to 2 per cent CPI, but inflation has only been at that level in 12 of the past 84 months.
Kamall says: “In many ways, King is culpable for our economic woes. His Bank has almost complete operational independence, yet he has failed to control inflation. He acts as if he is King of the City, arbitrarily calling for the heads of top bankers as if they were his courtiers.
“So here is a suggestion. When Mervyn King retires next year, the new governor should be handed a new employment contract by the Chancellor, requiring him or her to hit the inflation target within 12 months of taking office or resign. And the new governor, like all bankers, should be paid in line with performance.”
The Bank has responded to high inflation by pumping £375bn into the economy through quantitative easing. Kamall says: “The Bank of England has reacted to this headache like an alcoholic with a hangover. Printing even more money in the form of a third round of QE, announced just a few weeks ago, will probably lead to more inflation.”
The Treasury declined to comment.
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Readers' comments (2)
Mike | 20 Jul 2012 1:39 pm
Its crazy to suggest all our woes are inflation linked! Too much has been made about inflation and I think its time to get the nation working and build homes and provide mortgages & loans etc as this is much more important than the constant topic of inflation.
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Anonymous | 20 Jul 2012 2:37 pm
Unfortunatly our government and the BOE have forgotten that they are servants of the citizens of the UK.
It is not just the BofE it is the paymasters to blame.
QE to bail out banks has not served citizens. Why not effetively use the QE to fund NS&I loans that are open to all citizens with a bank mortgage to switch to on their main residence. Thus Bases rates and any margin is controlled for the country and the consumer not the banks who then lie and cheat with Libor.
Secondly having create a debt jubilee see Prof Steve Keen for details as your current economics have failed.
Third to control inflation have ZERO VAT rate all non discresionary purchase spending e.g food & Utility basic services reuired to keep a family with a roof over their heads and a basic human right to live.
Increase VAT on all non dicresionary items or create a flat rate equal to a basic income tax rate. and hike.
Let NS&I offer government set " Tax payer guaranteed deposit savings products.
Then finally pull the rug on all toxic banks. If we all as citizens have our debts repaid to the banks the banks cannot make a margin on this. Likewise if we all move our money to a UK citizens mutual deposit savings facility we are protected from the city casino.
Stop the UK taxpayer being on the blackmail senario of the Banks this is no better than the border control staff threats to strike during the olympics.
If the UK is a corruption driven economy with politicials and regulators being in the pockets of the banks rather than recognising they are paid for by the voting citizens nothing will change!
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