Bank of England governor Andrew Bailey has rejected suggestions by British prime ministerial front-runner Liz Truss that the government should have a bigger role in how the Bank operates.
With inflation on track to top 13% later this year – the highest level since 1980 – the ECB has said it wants to set “a clear path” for monetary policy and has promised a review of the ECB’s powers.
An ally of the Trust, Attorney General Suella Braverman, has gone even further and said the review would look at the BoE’s exclusive powers to set interest rates.
Bailey responded that it was “crucial” that central banks maintain their independence, something the BoE “had strong views on”.
“I don’t think from what I’m seeing there’s a lot of desire in this country to challenge the independence of the central bank,” he told BBC Radio in an interview broadcast today, a day after the BoE raised interest rates by the highest rate since 1995 and predicted a long recession.
“But I’m very happy to discuss with the new government, you know, the details and the nature of the regime in place.”
The BoE has been given operational independence in monetary policy since 1997, when it was tasked with achieving the inflation target set by the government.
The Trust has stressed that it is time to review this mandate, and has also suggested that a return to targeting the money supply could be a way to control inflation.
Bailey has come under heavy criticism of the BoE from the Truss and their backers for taking too long to raise rates.
Speaking to the BBC, he said he would dispute these criticisms: “there are some points where yes, I will say sorry, I don’t agree with that”.