Bank of England deputy governor Dave Ramsden (Kirsty O’Connor/PA)
24 October 2022

Bank of England ‘engaging’ with Treasury ahead of October 31 budget plan

24 October 2022

Deputy governor of the Bank of England Sir Dave Ramsden has said the central bank is “engaging” with the Treasury over the potential fiscal event on October 31.

The deputy governor for markets and banking also told MPs at the Treasury Committee that the recent improvement in gilt yields had shown that credibility is returning to British economic policy.

It came as former Chancellor Rishi Sunak won the Tory leadership race on Monday and is now set to be appointed Prime Minister.

The Government is due to unveil a new fiscal announcement on October 31, however, it is not yet known how the change in leadership could impact the timing of this.

In response to whether the Bank has been briefed about the October 31 announcements by the Treasury, Mr Ramsden 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 OBR on the elements which will go into the October 31 announcement,” he said.

“A particularly important thing I’ve stressed, and Sir Jon Cunliffe stressed last week, is what the new energy price guarantee will look like.”

Last week, Jeremy Hunt said universal energy support for households, which has capped bills for a typical household to £2,500 a year, will end after six months and then be replaced by more targeted support.

Mr Hunt also scrapped a number of policy announcements from predecessor Kwasi Kwarteng’s mini-budget, such as plans to reverse a proposed corporation tax rise, after it had resulted in a sell-off of Government bonds, called gilts.

However, gilt yields, which fall as prices rise, have eased back in recent days following the significant changes in policy.

Mr Ramsden 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 again on November 3, when members will decide whether to increase interest rates further and also outline the country’s economic outlook.

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