GUILDFORD (MNI) – There is a “non-trivial” chance that the
Bank of England Monetary Policy Committee’s inflation target will be
switched from its current CPI basis to CPIH, which includes housing
costs, MPC member Martin Weale said here.
Weale said the switch could give the MPC more room for manoeuvre,
with CPIH recently running below CPI, but this was far from certain. The
switch from the current 2% CPI target to CPIH could be made next year.
Weale noted the Office for National Statistics is proposing to
bring the new index in at the start of 2013 and the Chancellor of the
Exchequer would then have to decide whether to change the inflation
target.
In his speech here, Weale said “the proposed (CPIH) index has
recently shown an inflation rate of 0.3 to 0.5 per cent per annum less
than that indicated by the CPI. I have no basis for predicting whether
that will persist: in earlier periods CPIH has shown faster inflation
than has CPI.”
Weale is a member of the advisory panel overseeing the creation of
CPIH.
-London Bureau +20 7862 7491; drobinson@marketnews.com
[TOPICS: M$$BE$]
