Chancellor Rishi Sunak backs continued Bank of England independence

The Chancellor has indicated his support for continued Bank of England independence, telling MPs “whilst we do face challenges at the moment, the record of 25 years of central bank independence speaks for itself”.

His comments came as Conservative chair of the Treasury Committee Mel Stride called on Rishi Sunak to give a “categoric assurance to the House that there are no plans of any kind to restrain the independence” of the Bank of England.

Speaking during Commons Treasury questions, Mr Stride said: “There has naturally been criticism of the Bank of England given the level of inflation and their inflation target, but amongst that criticism have been reports that some in Government, including perhaps one member of the Cabinet, have actually been suggesting that the independence of the Bank of England should be removed.

“So could I ask the… Chancellor whether he agrees with me that it is essential that our central bank is independent, in order to maintain the credibility and integrity of our monetary policy, and can he give a categoric assurance to the House that there are no plans of any kind to restrain the independence of our central bank?”

Mr Sunak replied: “I agree with him wholeheartedly and whilst we do face challenges at the moment, the record of 25 years of central bank independence speaks for itself with an average inflation rate of exactly 2% and I know all colleagues will want to make sure that we return to that as swiftly as possible, and I can assure him that is both my and the governor’s ambition.”

The Government has insisted it supports the Bank of England’s independence, but behind the scenes ministers have been critical of the failure to curb spiralling inflation.

Cabinet minister Brandon Lewis said he was “surprised” by the Governor of the Bank of England issuing an “apocalyptic” warning about rising food prices.

In a sign of the tension between the Government and the Bank, Mr Lewis criticised Governor Andrew Bailey’s choice of words to describe the rising cost of living.