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Economics

Father of UK Inflation Target Says ‘Terrible Error’ to Drop It

  • Former chancellor Norman Lamont criticizes money supply option
  • Tory leadership contender Truss proposes reviewing BOE mandate
Customers walk between stalls at a street market in London, UK.

Customers walk between stalls at a street market in London, UK.

Photographer: Chris Ratcliffe/Bloomberg

Former Chancellor of the Exchequer Norman Lamont, who introduced the UK’s first inflation target in 1992, said it would be a mistake to abandon the measure in favor of a money supply goal, in an implicit criticism of proposals by Liz Truss, the front-runner to be Britain’s next prime minister.

Truss, the foreign secretary, has repeatedly suggested she’ll re-examine the Bank of England’s remit of targeting a 2% inflation rate if she becomes prime minister next month, blaming the UK’s soaring prices on the country’s monetary policy. Last month, she said the country hasn’t been “tough enough” on monetary supply.