Think Tank Proposes Raising UK Inflation Target to 3% for More Monetary Policy Flexibility

A think tank says the UK should consider raising the Bank of England's inflation target from 2% to 3% to give it more flexibility during downturns.

A higher target would allow higher interest rates, leaving more room to cut rates in a crisis and reduce government borrowing.

The think tank says changing the target should happen after inflation returns to 2% to avoid damaging credibility.

The report says coordinating with other countries is ideal but a weaker pound may be worth it if that's impossible.

Without more monetary policy flexibility, government debt levels could nearly double over 50 years.