LONDON (Reuters) – Bank of England Governor Andrew Bailey has rejected suggestions from Britain’s next prime minister favorite Liz Truss and her supporters that the government should play a greater role in shaping the way the central bank operates.
With inflation exceeding 13% this year, the highest since 1980, Truss said he wanted to set a “clear direction for travel” for monetary policy and promised to review the Bank of England’s mandate.
Truss’ ally, Attorney General Suila Braverman, went so far as to say the review would call into question the bank’s exclusive powers to set the interest rate.
Bailey responded by saying it was “critical” that central banks maintain their independence, something the BoE has “strong opinions on”.
He told BBC Radio in an interview broadcast on Friday, a day after the bank raised interest rates..interest rates were at the highest level since 1995 and predicted a long recession.
“But I am very happy to discuss with the new government, as you know, the details and nature of the existing system.”
The Bank of England gained operational independence for monetary policy in 1997, when it was tasked with achieving the inflation target, currently set at 2%, set by the government.
(William Schomberg reports)
