Labour May Task Bank of England Target for Gains in House Prices
The Bank of England could have its remit expanded to include a target for house-price inflation if the U.K.’s opposition Labour Party comes to power.
The idea, which was proposed by the Institute for Public Policy Research think tank in July, is under consideration by shadow housing secretary, John Healey, his spokesman said Wednesday. A spokesman for the BOE declined to comment on the proposal.
If adopted, the policy could include giving the BOE’s Financial Policy Committee greater tools to cool mortgage lending and creating a cross-government approach to target the pace of house price-gains. The BOE has previously acted to curb housing risks, notably in 2014, when Governor Mark Carney introduced measures to limit riskier mortgages.
House price growth in the U.K. has already been slowing since the vote to leave the European Union in 2016. Nationally, values rose 1.7 percent in January compared with a year earlier, compared with over 9 percent as recently as 2014, Office for National Statistics data show.
The idea is the latest to gain attention in the debate about the BOE’s powers. A report commissioned by Labour last year suggested officials should be tasked with targeting 3 percent productivity growth and have its toolkit expanded to include credit guidance and greater use of macro-prudential policy.
Any change to the BOE’s mandate would likely prove controversial, however. Former central bank policy maker Kate Barker dismissed the idea in a post on Twitter as “totally absurd for the BOE unless given control of a whole range of other policies.”
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