Budget 13: Osborne announces new MPC remit

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The Bank of England’s monetary policy committee will consider more than just inflation when setting interest rates under a loosening of monetary policy unveiled by chancellor George Osborne in the Budget today.

The MPC will retain its 2 per cent inflation target over 12 months but will also be allowed to consider other factors apart from inflation when setting interest rates.

It is a similar dual mandate system to the one operated by the US Federal Reserve which considers the effect on unemployment when setting rates.

The MPC will also be asked to consider setting interest rates for the longer term instead of month to month.

Osborne says Bank governor Sir Mervyn King and incoming governor Mark Carney have both agreed to the new remit.

The Bank will report back on the moves during its August inflation report, the first under Carney.

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