The primary objective of the Monetary Policy Committee (MPC) is to maintain price stability. Its secondary objective, to support the economic policy of the Government, is subject to maintaining price stability.

Price stability is an essential pre-requisite for economic growth, and will remain the MPC’s primary objective when the Chancellor updates its remit alongside the Autumn Statement. It is for the MPC to judge how it sets monetary policy in line with its remit, and the MPC has our full support as it acts to return inflation to the 2% target.

The independent Office for Budget Responsibility (OBR) is the Government’s official forecaster.

The OBR published its most recent economic and fiscal forecasts in March 2023 and will publish an updated projection alongside the Autumn Statement on 22^nd November.

Recent food inflation in the UK has been driven by a range of factors. Domestic agricultural commodity prices increased due to increases in international commodity prices and changes in exchange rates and in particular the strength of the dollar. Alongside this there was an increase in food manufacturing costs and particularly energy costs, which also contributed to food inflation. These factors are the main reasons for recent high food inflation, as shown by the fact that other countries in Europe have experienced similar levels of food inflation.

On 28 September 2023, the government published draft secondary legislation for consultation on reforms to the ring-fencing regime. The reforms will make the regime smarter and simpler by taking forward recommendations made by the independent ring-fencing review and going further in a number of areas. This includes increasing the “core deposit” threshold, above which firms become subject to the regime, from £25bn to £35bn.

The deposit threshold was originally set at £25bn by HM Treasury following recommendations from the Independent Commission on Banking (ICB) in 2011. The government white paper published in 2011 in response to the ICB outlined that the threshold would need to be adjusted over time to reflect the evolution of banking practices and growth in the deposit base.

Since then, the deposit base has grown significantly and the resilience of the banking sector has increased. The proposed £10bn increase to the threshold would result in approximately 90% of banks’ UK retail deposits being covered by the ring-fencing regime, which is broadly in line with the proportion covered when the threshold was set originally.

The updated threshold will provide banks currently below the £25bn deposit threshold with more room to grow before becoming subject to the ring-fencing regime. By removing a potential barrier to growth for banks, this proposal will support competition in the UK retail banking industry, and benefit the sector and its customers as a whole

The government will publish an impact assessment on its proposed reforms to the ring-fencing regime alongside introducing forthcoming secondary legislation.

Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England. The Government fully supports the Bank in their mission to drive down inflation and is working closely with the Bank to ensure that fiscal and monetary policy are well coordinated.

The Government remains committed to monetary policy independence, and rightly does not comment on the conduct or effectiveness of monetary policy.

High inflation is the greatest immediate economic challenge that we must address. That is why the Government has made it a priority to halve inflation this year, on the path back to the target of 2% CPI inflation.

While recent data shows halving inflation will not be easy the government is doing three key things to deliver on this plan. First, remaining steadfast in our support for the independent MPC at the Bank of England, as they take action to return inflation to target of 2%. Second, making difficult but responsible decisions on tax and spending so we are not adding fuel to the fire. Third, tackling some of the causes of high inflation, including by introducing the labour market package at the Spring 2023 Budget, as the relative resilience of the economy and the tightness in the labour market are reflected in current domestic inflationary pressures.

In May, the IMF confirmed that we have taken “decisive and responsible” action to bear down on inflation, and achieved the right balance of fiscal and monetary response, while also focusing on growing the economy.

High inflation is the greatest immediate economic challenge that we must address. That is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Our commitment to this target is iron-clad and applies at all times. The Bank of England has the Government’s full support as they take action to return inflation to target.

Inflation has already fallen by more than a third from the peak in October. We are on track to halve inflation this year: the majority of major forecasters agree in forecasting inflation to halve by the end of the year and subsequently return to target. However, this is not inevitable, and we must remain vigilant.

Information on inflation in actual rentals for housing and its weight within the Consumer Prices Index can be found online at the following link: https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation/current.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

UK inflation has been affected by global factors, including Russia’s invasion of Ukraine affecting energy and food prices. The UK is not alone in facing these challenges, advanced economies across the world are feeling the impact of inflation.

That is why halving inflation is one of the Prime Minister’s top priorities. Evidence that corporate profits play a role is inconclusive. The independent Competition and Markets Authority have authority to intervene if they find evidence of anti-competitive conduct or competition law is breached.

High inflation is the greatest economic challenge that we must address, which is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Monetary policy, including all decisions on Bank Rate, is the responsibility of the independent Monetary Policy Committee at the Bank of England, and they have the Government’s full support as they take action to return inflation back to target.

MPC decisions over Bank Rate guide commercial banks’ decisions over the retail interest rates they charge on loans and pay on deposits. However, banks also make commercial judgements that influence the degree of pass‐through from changes in Bank Rate into retail interest rates, with conditions in financial markets and in the banking sector also influencing interest rates paid on deposits or charged for lending.

Nevertheless, we recognise this will be a concerning time for mortgage borrowers, particularly those who are due to come to the end of their existing deal in the immediate future.

Following the commitments agreed to support borrowers in December, the Chancellor met with mortgage lenders, UK Finance and the Financial Conduct Authority on 23 June. At this meeting, lenders agreed to a new Mortgage Charter to support borrowers struggling with their mortgage payments, which was published on 26 June. This sets out the standards lenders will adopt when helping their customers, including new flexibilities to help customers manage their mortgage payments over a short period. More information can be found at: https://www.gov.uk/government/publications/mortgage-charter/mortgage-charter

This is in addition to the measures the Government has already taken aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans, and protection in the courts through the Pre-Action Protocol.

The latest Office for National Statistics data indicates that annual total pay growth (including bonuses) was 6.5% in the three months to April.

The National Living and Minimum Wage rate was adjusted this April, in line with the recommendation from the independent Low Pay Commission (LPC). In light of this, we expect to see over 2 million workers earn a pay rise, and a further 4 million workers could indirectly benefit from said rise. We expect this increase to the minimum wage will put more money in the pockets of over 2.5 million of the lowest-paid people in the country.

The Government’s priority is halving inflation this year, on the path back to the target of 2% CPI. Our commitment to this target is iron-clad and it applies at all times. The Bank of England has the Government's full support as they take action to return inflation to this target through their independent monetary policy decisions, in line with the primacy of price stability in the Government’s monetary policy objective. The Monetary Policy Committee will continue to monitor closely indications of persistent inflationary pressures in the economy as a whole, including the tightness of labour market conditions and the behaviour of wage growth and services price inflation.

Information on inflation in transport insurance and its weight within the Consumer Prices Index basket can be found online at the following link: https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation/current

Insurers make decisions about the terms on which they will offer cover following an assessment of the relevant risks. This is usually informed by the insurer’s claims experience and other industry-wide statistics. The Government does not intend to intervene in these commercial decisions by insurers as this could damage competition in the market.

High inflation is the greatest economic challenge that we must address, which is why the Government has made it a priority to halve inflation this year, on the path back to the 2% target. Monetary policy is the responsibility of the independent Monetary Policy Committee at the Bank of England, and they have the Government’s full support as they take action to return inflation back to target.

Consistent with monetary policy independence, the Chancellor has regular meetings with the Governor of the Bank. Open exchange of views in these meetings is critical for the Government and the Bank to understand each other’s views on the outlook for the economy and monetary and fiscal policy, to support policy making in both institutions. These meetings are therefore confidential.

The fiscal steps that are being taken to tackle inflation have been set out in the recent open letter from the Chancellor of the Exchequer to the Governor of the Bank of England.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1164809/Chancellor_Open_CPI_Letter_-_June_2023.pdf

Further, active policy decisions that reduce inflation this year, including extending the Energy Price Guarantee and maintaining the 5p cut in fuel duty, were set out at Spring Budget 2023.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1144441/Web_accessible_Budget_2023.pdf