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BOE remit change key Budget announcement

The Chancellor has changed the remit of the Bank of England's Monetary Policy Committee Photo: REUTERS/Olivia Harris

One of the more important changes announced by the Chancellor this afternoon was a change in the remit of the Bank of England's Monetary Policy Committee.

The review of the Monetary Policy Framework will enable the Bank of England to focus less on its inflation target (as it does currently) and more on the health of the whole economy.

The outgoing governor of the Bank - Sir Mervyn King - says it is a "sensible change" and we are told the incoming governor, Mark Carney, agrees.

The Chancellor's aides say it has been modelled on the central banks in Canada and the United States.

The Federal Reserve, for example, has pledged to keep low interest rates and its stimulus package in place until the unemployment rate falls below 6.5 percent.

The Treasury is hoping that setting the long-term direction of travel will encourage businesses to invest with more certainty.

Mark Carney will announce how he intends to proceed - and how he will set long-term monetary policy - when he delivers his first Inflation Report in August.

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