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| Version 0 | Version 1 |
|---|---|
| Mark Carney suggests targeting economic output | Mark Carney suggests targeting economic output |
| (35 minutes later) | |
| Mark Carney, who will take over as governor of the Bank of England next year, has suggested targeting economic output instead of inflation. | Mark Carney, who will take over as governor of the Bank of England next year, has suggested targeting economic output instead of inflation. |
| At the moment, the Bank's job is to aim for an inflation target of 2%. | At the moment, the Bank's job is to aim for an inflation target of 2%. |
| Targeting gross domestic product (GDP) that has not been adjusted for inflation would mean the economy would have to catch up with previous shortfalls, Mr Carney said in a speech. | Targeting gross domestic product (GDP) that has not been adjusted for inflation would mean the economy would have to catch up with previous shortfalls, Mr Carney said in a speech. |
| He said it might be a good option when interest rates were near zero. | He said it might be a good option when interest rates were near zero. |
| Mr Carney is currently governor of the Bank of Canada. | Mr Carney is currently governor of the Bank of Canada. |
| He said one problem with changing the target would be that "people must generally understand what the central bank is doing - an admittedly high bar". | He said one problem with changing the target would be that "people must generally understand what the central bank is doing - an admittedly high bar". |
| It was his first speech since the unexpected announcement of his appointment to the Bank of England top job. | It was his first speech since the unexpected announcement of his appointment to the Bank of England top job. |
| Targeting the country's economic output rather than inflation would be a major change to monetary policy, although it is not within the power of the Bank to change its target. | |
| Targeting inflation has been a key plank of economic orthodoxy around the world for decades. | |
| Mr Carney also suggested that a central bank could make it clear how high inflation or unemployment would have to go before interest rates would be increased. | |
| He said that people would have to be confident that rates would stay very low even if there was a small rise in inflation above the target level, because otherwise, low rates would be a less effective stimulus to the economy. |