Shadow Chancellor John McDonnell has set up a panel to review the mandate of the Bank of England’s Monetary Policy Committee (MPC), which sets UK interest rates. The panel will be led by David Blanchflower, a former member of the MPC, and will include Adam Posen, Simon Wren-Lewis and Lord McFall. It could mean a radical overhaul of how the Bank of England functions under a Labour Government.

In an article for the Financial Times, McDonnell says that the panel will consider whether the MPC “should look at objectives other than the inflation target — and whether that target itself should be higher or lower.”

He notes that the MPC’s remit was last changed two years ago by George Osborne, when it was “clarified that the committee need not force inflation back to the target by the fastest possible route if a slower one would be better for growth”.

“We will consider whether such trade-offs should be formalised”, writes McDonnell. “And we will look at more radical ideas, such as introducing a target for nominal gross domestic product — a suggestion Mr Carney broached in 2012.”

The panel will consider a much wider range of MPC reforms, such as whether there should be regional representatives from around the UK, changing the number of members, addressing the gender imbalance, how often they meet and the committee’s relationship to fiscal policy. They will consider how the committee differed from the US Federal Reserve in it quantitative easing recommendations, and whether a national investment bank should be set up.

McDonnell says he has not endorsed any particular plans to Blanchflower, and wants input from “other political parties and organisations”.