COVENTRY, England Feb 16 A senior policymaker
at the Bank of England said on Saturday he did not support the
idea of changing the central bank's remit to focus on a mix on
inflation and growth.
Martin Weale, one of nine members of the bank's Monetary
Policy Committee, said adopting a target for nominal gross
domestic product in the current environment of low economic
growth would risk increasing inflation and inflationary
Speculation about a possible change in the Bank of England's
focus away from targeting inflation to nominal GDP grew late
last year when the next governor of the bank, Canadian Mark
Carney, mentioned the idea in a speech.
Since then, Carney has suggested he does not favour such a
change at the bank which he is due to join in July.
Weale, who studied nominal GDP targeting in the 1980s, said
the Bank of England would risk sending a signal that it was no
longer taking inflation as seriously as before, especially at a
time when price growth is running persistently above the bank's
2 percent target.
"To change a target because inflation was above target would
certainly be seen, if not as giving up on inflation, it would be
seen as stopping taking it seriously, and I can see that being a
problem as well," he said.
Weale, speaking to students at an economics conference
organised by the University of Warwick, said he expected the
arrival of Carney would bring changes to the Bank of England
although he declined to speculate in detail on what those
changes might be.
"Obviously any organization, when you have a change ... in
the boss, then things change," he said in answer to a question.
"The Bank of England has been around since 1694 and since
1694 it has pursued quite a lot of different policies using
different instruments that reflect the circumstances and I
certainly wouldn't want to suggest that that process of
innovation must have come to an end."