An inquiry into the independence of the Bank of England has been launched by British lawmakers on Friday. The Economic Affairs Committee (EAC) of the House of Lords stated that the review will focus on the BoE’s role, governance, accountability structures and remit.
It clarified that the inquiry will not examine policy decisions but instead will scrutinise the central bank’s independence.
Last year, during former prime minister Liz Truss’s brief tenure, some politicians questioned the BoE’s independence, prompting Truss to announce a review of the bank’s mandate during her Conservative Party leadership campaign.
One of Truss’s supporters, Suella Braverman, who is now the country’s interior minister, suggested that the review would explore the central bank’s independence.
However, Truss resigned from her post after her economic policies caused chaos in financial markets, and the review never took place.
The EAC concluded in 2021, during a review of quantitative easing, that the BoE’s purchases of government debt during the COVID-19 pandemic had “started to erode the perception that the Bank has acted wholly independently of political considerations.”
As part of its inquiry, the EAC will seek views on the relationship between the BoE and the country’s finance ministry, whether appointees to key committees have the necessary expertise, and the clarity of BoE communications.
The EAC comprises members, including former BoE governor Mervyn King and Andrew Turnbull, the top civil servant at the Treasury between 1998 and 2002.
The Bank of England was granted independence on monetary policy in 1997, and legislation outlining those powers was enacted in 1998, making this year the 25th anniversary of the bill.