18 Sep

Clegg in pledge on base rate policy

Clegg in pledge on base rate policy

Liberal Democrat leader Nick Clegg has voiced his support for a change in the remit of the Bank of England's monetary policy committee (MPC) that could cut the cost of mortgages.

In his main party conference speech in Bournemouth Mr Clegg stated that a Liberal Democrat government would instigate a new rate policy that would "take house prices into account".

Such a change could mean getting the MPC to set rates according to the retail prices index (RPI), rather than the consumer prices index (CPI) at present.

Unlike CPI, RPI includes house prices.

The difference this could make was shown this week when data from the Office for National Statistics revealed that CPI had risen from 4.4 per cent to 4.7 per cent, whereas falling house prices caused RPI to drop from five per cent to 4.8 per cent.

Mr Clegg and his party could press the issue if the next election produces a hung parliament with the Liberal Democrats holding the balance of power.
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