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MEP: Next BoE governor must control inflation or resign

Mervyn King 440

Conservative MEP Syed Kamall says the next Bank of England governor should have to bring inflation in line with the Bank’s 2 per cent target within 12 months or resign.

Writing in City A.M, Kamall, who is a member of the European parliament’s economic and monetary affairs committee, says inflation has too often been above target.

He says in the year after the Bank was given its independence in 1997, its then target of 2.5 per cent RPI was missed in every month but one. He adds that in response, then Chancellor Gordon Brown changed the target to 2 per cent CPI, but inflation has only been at that level in 12 of the past 84 months.

Kamall says: “In many ways, King is culpable for our economic woes. His Bank has almost complete operational independence, yet he has failed to control inflation. He acts as if he is King of the City, arbitrarily calling for the heads of top bankers as if they were his courtiers.

“So here is a suggestion. When Mervyn King retires next year, the new governor should be handed a new employment contract by the Chancellor, requiring him or her to hit the inflation target within 12 months of taking office or resign. And the new governor, like all bankers, should be paid in line with performance.”

The Bank has responded to high inflation by pumping £375bn into the economy through quantitative easing. Kamall says: “The Bank of England has reacted to this headache like an alcoholic with a hangover. Printing even more money in the form of a third round of QE, announced just a few weeks ago, will probably lead to more inflation.”

The Treasury declined to comment.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Well Mr Kamall I think that you should be ashamed of your lax and flawed thinking.
    Imported food and energy prices in particular are outside the control of the governor of the Bank of England and are the main factors in the inflation figures so you are talking total rubbish.
    Now if you were pressing for self-sufficiency in food and energy you would have a really good point of view and would be supportable.
    Please stop talking because you like the sound of your own voice

  2. It seems that Mr Kamall has not got the first clue about world economies or how they work. I would bet anything that he is an economist!!!!!!

  3. Well John Lacy and Big’yan clearly you don’t have clue. Mr Kamall makes some very good points. The BOE, governor and deputy governors are out of control. The BOE has dirty hands with the Libor scandal an now its doing its best to wreck the UK economy with QE. Not to mention that it was a clear conflict of interests as the two deputy governors benefited by over a 30% increase to their pensions by doing more QE. Everyone else lost out.

  4. David Bashforth 22nd July 2012 at 8:35 am

    If anyone seriously thinks that the BOE is remotely bothered that inflation is over its 2% target is living in cloud cuckoo land. Inflation is the only way we will get out of this debt nightmare and the BOE recognise this. Their actions speak louder than their words QE QE and thrice QE!

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