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Bank of England operational independence: why did the Bank get it wrong on inflation?

Friday 5 May

At 3pm on Tuesday 9 May the House of Lords Economic Affairs Committee will be taking evidence from:

  • Donald Kohn, former Vice Chair of the US Federal Reserve, and former Financial Policy Committee member at the Bank of England
  • Martin Wolf, Chief Economics Commentator at the Financial Times.

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

  • How much the UK’s low inflation over 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.
  • Risks associated with a central bank’s role as both a micro and macroprudential supervisory authority.
  • Effectiveness of international cooperation between central banks and regulatory bodies to pre-empt financial instability.
  • Whether Quantitative Easing (QE) and the size of the balance sheet has compromised the Bank of England’s independence and credibility in the fight against inflation.

The meeting will be held in Committee Room 4 of the House of Lords. It will also be streamed live on Parliament TV.

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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