Adam Posen, Simon Wren-Lewis and Lord John McFall to join former rate-setter Danny Blanchflower on Labour committee reviewing the Bank of England's remit

Chris Papadopoullos
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The Bank of England's two per cent inflation target has been criticised for being too narrow and failing to prevent the Great Recession (Source: Getty)

Labour economic adviser David "Danny" Blanchflower will be joined by US economist Adam Posen, Oxford professor Simon Wren-Lewis, and former Treasury Select Committee chair Lord John McFall, to develop proposals for a change to Bank of England’s remit.

The Bank currently adjusts interest rates to ensure inflation will be two per cent over a two-year horizon.

Read more: Blanchflower - Austerity's failed and Labour is right that the BoE needs a new mandate

But Blanchflower and his team plan to meet with a range of economists and central bank and Treasury officials to find a mandate that does a better job of fending off economic recessions.

Blanchflower told City A.M. that the team will "look at a broader remit like that of the Fed, where you have both maximum employment and stable prices in an a flexible way".

Our assumption is that independence is good, there is no reason we should question at all the independence of the Bank, just its remit and how its structured and what it targets seems appropriate – especially in light of the fact that the remit didn’t prevent the worst recovery in centuries.

So it’s time to go back and look at whether inflation targeting is the right thing to do.

The team is set to meet formally every three months.

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