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Thursday, Dec 08, 2022

Bank of England 'engaging' with Treasury ahead of chancellor's statement

Bank of England 'engaging' with Treasury ahead of chancellor's statement

Deputy governor Sir Dave Ramsden told MPs the central bank was being briefed by the Treasury ahead of the fiscal event.

The Bank of England's deputy governor has said it is "engaging" with the Treasury over the fiscal event expected on 31 October.

Sir Dave Ramsden was speaking to MPs in the Treasury Committee on Monday afternoon when he was asked if the bank has been told about the announcements.

He said: "Yes, we have. We haven't started the monetary policy committee (MPC) round yet which is one reason why I'm able to be here, but we have started putting the forecast together and we are already engaging with Treasury officials who are in turn engaging with the Office for Budget Responsibility on the elements which will go into the 31 October announcement.

"A particularly important thing I've stressed, and Sir Jon Cunliffe (the bank's deputy governor for financial stability) stressed last week, is what the new energy price guarantee will look like."

Last week, new Chancellor Jeremy Hunt said energy support for households will end after six months to be replaced by more targeted support.

Mr Hunt also axed a number of other announcements from predecessor Kwasi Kwarteng's mini-budget, after it prompted a sell-off of government bonds, called gilts.

However, gilt yields have eased since much of the mini-budget was wound back.

Sir Dave said: "You could argue we are quite close to a round trip over what has been a pretty turbulent few weeks.

"We've almost got back to where we started after our MPC announcement in September.

"There is an old adage that credibility is hard won and easily lost; that credibility is being recovered.

"That has to be followed through and a return to the kind of stability around policy making and framing around fiscal events would be important."

The Bank of England's MPC will meet on 3 November, when it will announce the latest move on interest rates and provide its outlook for the economy.

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