Bank of England governor Andrew Bailey welcomes review of bank’s role as he agrees to meet new Chancellor Kwasi Kwarteng every week
- Kwasi Kwarteng has reinstated weekly meetings with Bank of England Governor
- New Chancellor reiterated importance of the Bank of England’s independence
- Bank of England governor Andrew Bailey blamed Putin for UK’s financial woes
The governor of the Bank of England Andrew Bailey welcomed a potential review of the Bank’s role from the new Chancellor, calling it ‘good’ to review its role from time to time.
He also warned a recession is the ‘most likely outcome’, as he blamed Vladimir Putin for the economic crisis facing the UK.
Chancellor Kwasi Kwarteng visited Mr Bailey today, and he was keen to calm speculation over potential interference with the bank’s independence.
After the meeting the Treasury said that the two men would agree to re-instate weekly meetings and coordinate closely in their support for the economy.
The Chancellor said that the Government remains committed to the independence of the Bank of England and its remit over monetary policy.
It comes after Mr Kwarteng last month said that ministers ‘need to look again at what the mandate is’.
Bank of England Governor Andrew Bailey and new Chancellor Kwasi Kwarteng met today and discussed reviewing the bank’s role
Bank Governor Bailey blamed Vladimir Putin for the economic crisis facing the UK
During the meeting the pair agreed that getting inflation under control quickly is vital to tackling the challenges that the increasing cost of living is causing
Speaking to the Treasury Select Committee ahead of his meeting with the Chancellor, Mr Bailey said the Bank’s role in setting policy was last reviewed nearly a decade ago.
‘I think it is a good thing to review the remit from time to time, other central banks do that,’ he said.
‘The Canadians for instance have a formalised review every five years. The Federal Reserve and the ECB (European Central Bank) don’t have a regular schedule, but they do it.
‘There was a plan to do one in early 2020 when I was coming in as governor, which got derailed by Covid.’
However, he said there are some important elements of the remit.
‘It’s obviously for the Government to choose whether to do a review,’ he said.
During the meeting the pair agreed that getting inflation under control quickly is vital to tackling the challenges that the increasing cost of living is causing.
Mr Kwarteng told the governor of his strategies for growth and fiscal policy, which he believes can help combat inflation.
The governor of the Bank of England believes Russian President Vladimir Putin is to blame for many of the UK’s financial troubles
During the meeting in Parliament, Mr Bailey blamed the UK’s current economic woes on the Russian President, who has more or less strangled the export of Russian gas into Europe.
‘I’m afraid we can’t control what Vladimir Putin does, Mr Bailey said. ‘Let’s be blunt about it. What we can and must and will control is bringing inflation back to target, as a consequence of whatever does go on. There’s no question about that. We will do that.’
The Bank’s chief economist Huw Pill said forecasts of an economic downturn are due to energy prices.
‘If we do fall into a recession… I think it’s important to emphasise that’s a consequence of the impact of higher energy prices on the real incomes of UK residents, because we are a net importer of energy.
‘What we are buying from the rest of the world has gone up in price very, very significantly, relative to what we’re selling to the rest of the world.
‘I think we need to be cautious about saying that monetary policy is causing a recession.’
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