Inflation deviation triggers open letter to Chancellor
The Governor of the Bank of England has exchanged open letters with the Chancellor after inflation deviated by more than one percentage point from target. The statutory correspondence explains why prices diverged and outlines corrective policy steps.
Threshold breach triggers open correspondence
Under the Bank of England's monetary policy remit, the Governor is required to send an open letter to the Chancellor whenever Consumer Prices Index inflation deviates from the two percent target by more than one percentage point in either direction.
The correspondence must explain the factors driving the deviation, the MPC's policy outlook, and the specific actions planned to return inflation to target.
Alongside the publication of the letter on September 17, 2026, the Monetary Policy Committee announced that it held the Bank Rate at 3.75 percent.
The exchange coincides with operational updates on the Asset Purchase Facility and quantitative tightening gilt sales.
A formalized accountability channel
The open letter framework serves as the primary accountability channel between the Bank of England and HM Treasury.
Whenever the headline consumer price measure breaches the one-percentage-point threshold, the Governor must clarify the horizon over which inflation is expected to return to the 2.0 percent objective.
This formal mechanism ensures transparency regarding external shocks, domestic price pressures, and policy trade-offs while preserving central bank operational independence.
Routine ritual with real stakes
The letter requirement remains a vital transparency tool that forces policymakers to justify target misses in public.
Yet frequent breaches risk reducing a serious accountability mechanism to routine administrative choreography.
Credibility ultimately hinges on whether the proposed return path to two percent proves realistic.