Liz Truss to look at Bank of England’s changing mandate on inflation

Foreign Secretary Liz Truss, frontrunner in the race to become Britain’s next prime minister, said she would try to change the Bank of England’s mandate to ensure it could get inflation under control.

At a meeting of Conservative party members in Cardiff on Wednesday, she argued that inflation had been caused by “massive” supply-side shocks after the pandemic and the war in Ukraine, and said that she had rejected the central bank’s mandate, which has a target to maintain inflation at 2 percent.

The central bank is widely expected to raise interest rates on Thursday, possibly by half a percentage point, amid rising prices. In June, UK consumer price inflation was at a 40-year high of 9.4%.

She told the event: “The best way to deal with inflation is monetary policy and what I’ve said is that I want to change the mandate of the Bank of England to make sure it matches some of the most common in the future.” effective central banks in the world to control inflation.”

Truss added: “The last time the mandate was reviewed was in 1997 under Gordon Brown. Things are very, very different now.”

The Secretary of State, who has presented himself as the low-tax, high-growth candidate, has pledged to reduce the planned increase in national insurance and introduce low-tax investment zones to revive the economy and support families through the crisis of the cost of living.

“What’s just wrong right now is to put taxes on ordinary people while they’re struggling to pay their fuel bills, they’re struggling to pay their food bills,” she said.

Rishi Sunak at the Tory Hustings in Cardiff

Rishi Sunak at the Tory Hustings in Cardiff. He said he is open to the idea of ​​exploring inheritance tax rules © REUTERS

Her campaign was given a boost on Wednesday when former health minister Sajid Javid offered his support. In a commentary in the Times newspaper, Javid praised the Secretary of State’s “sharp focus and willingness to challenge the status quo”.

“After years of working closely with him in the cabinet, Liz is delighted to have Sajid on her team,” the Truss campaign said. “His support indicates that Liz is bringing the party together and that they are uniting behind her bold plan to cut taxes, grow the economy and help the country.”

Recent YouGov polls have given Truss a solid lead in the leadership race, with 69 percent of members favoring the secretary of state, compared with 31 percent backing former chancellor Rishi Sunak.

On the eve of the BoE’s rate-setting meeting, Sunak warned that the problem would worsen and drive up interest rates if the country rushed to implement “early tax cuts” before the country cut inflation.

“I will make tackling inflation my top economic priority. And I will deliver a long-term sustainable tax plan that means people can bank the money it saves them,” he said before meeting party members.

Former Tory leader Lord Michael Howard supported the former chancellor at the hustings, drawing parallels between Sunak and the late Margaret Thatcher.

“She hated inflation. So does Rishi Sunak. She hated the thought of borrowing more. So does Rishi Sunak. She would never have tolerated unfunded, irresponsible tax cuts. Neither does Rishi Sunak,” he told the Cardiff crowd.

Speaking to members of the Tory party, Sunak also said that while he examined the estate tax rules, “it was not what he intended to do”, he was open to it.

He argued that supporting aspiration was a “conservative value” and that inheritance tax was part of that, but he stressed the importance of rewarding those who have gainful employment.

“So, over time, is that something we should look at? Of course we have to, because for that people who work hard should be rewarded’, he said.

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