Low and stable inflation is an essential pre-requisite for economic growth, as it provides certainty for households and businesses and helps them make day-to-day economic decisions. The Bank of England’s Monetary Policy Committee (MPC) has the primary objective, set out in law, of maintaining price stability through its use of monetary policy. The Chancellor reaffirmed the remit for the independent MPC at the Budget on 3 March 2021. The remit re-confirms the inflation target for the MPC as 2 per cent as measured by the 12-month increase in the Consumer Prices Index (CPI).
The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, and essential for the effective delivery of monetary policy, so the government does not comment on the conduct or effectiveness of monetary policy.