BOE Asked to Explain Inflation Target Misses Sooner in Letters

(Bloomberg) -- U.K. Chancellor of the Exchequer Philip Hammond ordered the Bank of England to expedite its letter-writing in the event that Britain’s inflation misses target.

The central bank, as part of its remit, is charged with explaining why it missed its 2 percent inflation goal by more than 1 percentage point. It now has a maximum of seven days from the publication of the offending data to detail why price gains veered so much and what actions it’s going to take.

Previously, the BOE would publish such a letter with the minutes of the meeting after the inflation data were published. Governor Mark Carney last sent one in February after inflation had climbed to 3.1 percent the previous November.

Hammond re-confirmed the Monetary Policy Committee’s inflation target as a 2 percent annual increase in the consumer-price index in a letter published after he delivered the budget in Parliament.

He also reiterated the goal of the BOE’s Financial Policy Committee to protect stability. That includes stress-testing banks for worst-case Brexit scenarios.

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