The independence of the Bank of England is sacrosanct, says new chancellor Kwasi Kwarteng after weeks of speculation about the old lady’s future
The Chancellor, on his first full day in office yesterday, declared that the independence of the Bank of England was “sacrosanct”.
Kwasi Kwarteng met Governor Andrew Bailey and the two agreed that they would meet twice a week to coordinate support for the economy.
The Bank of England has come under fire as inflation surged above 10%, five times its target of 2%.
Meetings: Chancellor Kwasi Kwarteng (pictured) met Governor Andrew Bailey and the two agreed to meet twice a week
Prime Minister Liz Truss said during her campaign for the Tory leadership that she intends to review her mandate to “make sure it is tough enough on inflation”.
But over the weekend, during a BBC interview, she said she “strongly believes in the independence of the Bank of England” and in its task of taming inflation.
Kwarteng said in a tweet yesterday after meeting Bailey: “The bank’s independence is sacrosanct as we work together to meet cost-of-living challenges.
“I have resumed regular meetings with the governor — biweekly initially — to coordinate our ongoing response.”
A Treasury Department spokesman said previous chancellors had also met regularly with the governor, but the new arrangement formalized the arrangement.
The government said Kwarteng and Bailey would be “coordinating closely to support the economy in the coming months”.
Earlier, the governor told finance committee deputies that it was good practice to review the bank’s mandate “from time to time.”
The Chancellor also met heads of 14 banks and financial firms, telling them the government will pursue an “unabashedly pro-growth agenda” – with likely more borrowing to deal with cost-of-living pressures.
Kwarteng said in a tweet yesterday after meeting Bailey, “The bank’s independence is sacrosanct as we work together to meet cost-of-living challenges.”
The government is preparing to face over £100bn of pressure on energy bills
Among the bosses courted by Kwarteng yesterday were the heads of UK-based banks HSBC, Lloyds, Natwest and Barclays, as well as top executives from foreign-owned lenders including Goldman Sachs and UBS.
Other participants included senior executives from the London Stock Exchange Group and insurer Legal & General.
Kwarteng – who was business secretary under Boris Johnson – told them the government’s immediate priority will be to support families and businesses squeezed by the cost-of-living crisis, which means “necessary higher borrowing in the short term”.
But he also pledged to keep the debt-to-GDP ratio “on a downward path,” a Treasury spokesman said.
The Chancellor also said economic growth was too low and promised a “radical supply-side agenda”.
That means boosting investment and innovation and cutting red tape and taxes to create jobs and wealth and spur growth, the government spokesman said.
Kwarteng said: “We face exceptional economic challenges in the coming weeks and months and I know families and businesses across the UK are concerned.
“The Prime Minister and I are committed to taking decisive action to help the British people now, while pursuing a shameless pro-growth agenda. We have to be determined and do things differently.
“It means we have a relentless focus on how to unlock business investment and increase the size of the UK economy, rather than how to redistribute what’s left.”