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It’s time to update the Bank of England’s mandate

Stop fixating on the 2 per cent inflation target and focus on growth instead

By John Mills  

Photo: Philip Toscano/PA Wire/PA Images

Last month the government published its job description for a new Bank of England governor. While this has triggered an important discussion about the type of skills a successful governor needs, much less debate has focused on whether maintaining inflation as close as possible to 2 per cent should still be the centrepiece of the Bank’s and the government’s economic policy.

The Bank’s current mandate owes itself largely to the economic challenges of the 1970s and 1980s. In 1975, year-on-year inflation peaked at 24.3…

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