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Inflation

Volume 475: debated on Monday 28 April 2008

To ask the Chancellor of the Exchequer what assessment has been made of the likely effects on inflation of the provision by the Bank of England to banks of arrangements for enhanced liquidity. (201898)

The Bank of England’s Monetary Policy Committee (MPC) has full operational independence in meeting the Government’s inflation target. The MPC makes interest rate decisions based on rigorous analysis, taking into account all relevant information, which includes the provision of liquidity to banks by the Bank of England.

In addition, the Bank of England has stated that the Special Liquidity Scheme announced on 21 April 2008

“will be ring-fenced and independent of the Bank of England’s regular money market operations. So it will not interfere with the Bank’s ability to implement monetary policy.”