Policy maker calls for BOE to concentrate on Inflation

Tim Besley, one of the four external members on the MPC, said in a speech today that the Bank of England must now realign its goals with the onus on stabilising inflation rather than focusing on alleviating the pressures of a slowing UK economy.

Amongst others he has called for the Monetary policy to focus on price stability as per the inflationary targets set.

This is a timely announcement following the decision by the Bank of England to use taxpayers money to help the stimulate inter-bank lending with a £50 billion liquidity scheme.

The move will mean that the government will offer secure government bonds in exchange for the banks mortgage securities in order to release and increase confidence in the banks main asset base and help the circulation of money.

The Governor Mervyn King has said to have been in full support of the move because it removes the greatest pressure that was caused as a result of the current turmoil in the financial markets.

This in turn will help the MPC to focus on controlling inflationary pressures.

Besley warned that the role of Monetary Policy can still help to soften the adjustment on economic change though it must not be used to prevent economic changes from occurring.

Currently policy makers are having to balance the risk of sending commodity prices, consumer goods and energy prices sky high in accordance with keeping demand and output buoyant.

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