Truss ‘irresponsible’ for threatening to review Bank of England remit
Liz Truss has been accused of being “deeply irresponsible” for threatening to tinker with the Bank of England’s mandate on the brink of a recession.
The shadow chancellor, Rachel Reeves, attacked the Tory leadership frontrunner after Truss and her allies repeatedly questioned the performance of the Bank’s governor, Andrew Bailey, and said she would review the institution’s remit.
“This is deeply irresponsible from a Conservative leadership candidate. It creates huge uncertainty that will hold back vital investment in our economy,” Reeves said.
“Families are seeing the bills pile up while their ability to pay shrinks. Meanwhile, the Conservatives are once again playing the blame game instead of taking responsibility for the past 12 years of economic mismanagement that has left the UK uniquely exposed to shocks.”
Labour pointed out that the average inflation rate from 1979 to 1997, when the Bank was made independent, was 6%, peaking at 19%. In the 25 years since, it has averaged 2%.
The Bank’s monetary policy committee increased interest rates by 0.5 percentage points on Thursday, and published dire economic forecasts pointing to a recession lasting five quarters until the end of 2023. Inflation, already at a 40-year high of 9.4%, is expected to hit 13% and remain elevated through 2023.
The business secretary, Kwasi Kwarteng, widely viewed as a potential chancellor under Truss, told Sky News on Friday: “The job of the Bank was to deal with inflation. They’ve got a 2% inflation target, that’s actually their mandate. And now inflation is getting [to] double digits. So clearly, something’s gone wrong.”
When asked if the Bank would keep its independence, he said “absolutely” but also described potential interventions.
“We need to look
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