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Bank of England operational independence: has separating the responsibilities of fiscal and monetary policy worked?

Monday 5 June 2023

At 3pm on Tuesday 6 June the House of Lords Economic Affairs Committee will be taking evidence from:

  • Charles Goodhart, Emeritus Professor of Banking and Finance, London School of Economics (LSE)
  • Raghuram Rajan, Former Governor of the Reserve Bank of India.

The meeting will be held in Committee Room 2 of the House of Lords. It will also be streamed live on Parliament TV.

Topics the committee is likely to cover in this session include:

  • The extent to which the UK’s low inflation over much of the past 25 years can be attributed to the Bank’s operational independence?
  • Whether central banks have fallen victim to groupthink and/or poor models.
  • Whether expanded remits ask too much of the Bank and risk its politicisation.
  • The balance between accountability and operational independence.

More about this inquiry

2023 marks the 25th anniversary of the Bank of England Act 1998. This Act gave the Bank of England its independence and reformed the structure, responsibilities and functions of the Bank.

The Economic Affairs Committee has launched an inquiry to examine how operational independence is working. It will focus on the Bank’s role and remit; whether the governance structures of the Bank are appropriate; and how the Bank is being held accountable for its actions.

It will not look at individual policy decisions that the Bank has taken.

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