Bank gets radical new powers to help boost growth and jobs A decision over which policies to introduce will be made by the Monetary Policy Committee after Mr Carney arrives in July. The committee has been asked to assess what would work in the UK and report back in the Bank's August Inflation Report. However, the changes will fuel speculation that the Bank will take a looser stance on rates and QE, which could undermine the pound. Yesterday, the pound rose on hopes the Chancellor's growth measures would help, but Jeremy Cook, economist at foreign exchange specialists World First, said: "I would recommend selling [sterling]. We expect [the mandate change] to result in further QE to try to stimulate the economy. By overhauling the remit, the Chancellor also underlined the lengths to which he will go to aid the recovery. His move came after another sharp downgrade by the Office for Budget Responsibility to its forecasts for both growth and borrowing. The OBR halved its growth outlook for this year to 0.6pc and downgraded its 2014 prediction from 2.1pc to 1.8pc. Borrowing will remain at £120bn for this year and next, the same as last year, despite £43bn of austerity savings. In total, for the six years to 2017, borrowing will be £60bn higher than expected in December, the OBR's figures showed. Economists said that changes to the Bank's mandate would help lift growth, shrinking the deficit as tax revenues rose. This change is less radical than some economists had hoped but it should give Mr Carney a little more freedom to support the economy," said Dario Perkins, an economist at Lombard Street Research. An overhaul of the Bank's mandate has been expected since Mr Carney first broached the subject in December last year, sparking an academic debate that the Chancellor then "welcomed." But the proposals unveiled in the Budget stop short of some ideas floated in the past four months, such as nominal GDP targeting to prioritise growth over inflation. Insiders at both the Bank and the Treasury stressed that price stability remained paramount, and the 2pc inflation target - which Mr Osborne said was "a necessary but not sufficient condition for prosperity" - would be unchanged to ensure the Bank's inflation-fighting credibility was not damaged. With a broader policy armoury, it will have to explain its actions more thoroughly in future. The token exchange of letters between the Chancellor and the Governor if inflation moves more than a percentage point away from target will, therefore, be replaced with a "more substantive exchange of views." The Governor will have to clarify "the trade-offs made in deciding how long it will be before inflation returns to target," the Chancellor said. The Bank's Funding for Lending scheme to push cheap credit to households and businesses could be used more widely. "We are now actively considering whether there are potential extensions to the FLS that will boost lending still further," Mr Osborne said. The scheme has had a dramatic effect on mortgage rates for first-time buyers but small businesses have yet to benefit. Their borrowing costs rose from 3.65pc to 4.22pc between December and January, the highest level in four years, despite the FLS.