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.
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.