LONDON (Reuters) – Amid the debate over a reform of the Bank of England’s (BoE) mandate, its chief Andrew Bailey has announced that he will remain in office for the full term of office.
He has been in office since 16 Mar 2020 and will remain in office until Mar 2028 according to the BoE https://www.bankofengland.co.uk/about/people/andrew-bailey/biography. He doesn’t think there’s a “big desire” in the country right now to question the central bank’s independence, Bailey told BBC radio on Friday. He is open to a discussion with the incoming government on how the BoE should work. However, it is crucial to have an independent central bank. He was responding to plans by Liz Truss, the favorite in the race to succeed outgoing Conservative Prime Minister Boris Johnson. Truss wants to put the 25-year-old mandate, which made the central bank independent of politics, to the test.
The model, devised by then Labor Treasury Secretary Gordon Brown, allows the central bank to set interest rates at its own discretion in ways that it considers most appropriate to achieve the government’s inflation target. The central bank has been criticized several times in the ranks of the Conservatives for having reacted too slowly in monetary policy to the rapidly rising inflation, which is severely eroding the purchasing power of the British.
The central bank raised interest rates by half a percentage point to 1.75 percent on Thursday – the biggest increase in 27 years. Despite the threat of a recession later this year, according to Bailey, the monetary policy holders decided by a clear majority of eight to one in the Monetary Policy Committee for a sharp hike.
(Report by William Schomberg, written by Reinhard Becker, edited by Hans Seidenstcker; If you have any questions, please contact our editorial team at [email protected] (for politics and economics) or [email protected] (for companies and markets).)