The Telegraph, May 8 2022, Roger Bootle
An important anniversary came around last week, namely 25 years since then-chancellor Gordon Brown announced that the Bank of England was being given operational independence. Should we be celebrating?
In previous decades, monetary policy decisions were taken by the chancellor of the day, albeit with advice from the Governor of the Bank. Under this regime, interest rates would sometimes be changed to fit in with the political requirements of the government – including the desire for reductions during Conservative Party conference week.
Things began to change in 1993, after Britain’s ignominious exit from the European Exchange Rate Mechanism (ERM).
For the next four years, regular discussions about monetary policy between the chancellor, Ken Clarke, and the Governor, Eddie George, were minuted and published. This regime, which became known as “the Ken and Eddie show”, represented independence-lite. It was only in 1997 that full independence was granted.
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