Downing Street Says » Inflation

» Wednesday, February 16, 2011

Inflation

Asked whether the Prime Minister was relaxed about interest rates rising, the PMS said people should look at the Chancellor’s letter from yesterday. Monetary policy was clearly an issue for the Monetary Policy Committee, but he said for its part, the Government’s commitment to delivering its fiscal consolidation plan continued to provide the MPC with the space it needed to target low inflation.

In the current context stepping back from our commitment for fiscal consolidation would make the MPC’s job harder by putting further upwards pressure on inflation and would risk prompting an offsetting monetary tightening, such that overall there would be little if any impact on demand.

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