Economic Affairs Committee
Making an independent Bank of England work better

1st Report of Session 2023-24 - published 27 November 2023 - HL Paper 10

Contents

Summary

Chapter 1: Introduction

25 years since independence: a time for review

Figure 1: Bank of England/ Ipsos Inflation Attitudes Survey: assessing the way the Bank is doing its job to set interest rates to control inflation

Our inquiry

Chapter 2: Inflation performance and the monetary framework

Operational independence: UK inflation since 1997

Figure 2: UK CPI inflation rates (monthly, year-on-year percentage changes)

Figure 3: KOF (Swiss Economic Institute) Globalisation Index against median inflation rates from 22 OECD countries

Figure 4: Annual percentage change in CPI (UK, Eurozone, France, Japan and US)

The price stability framework

Role of asset prices

Fiscal and monetary policy mix

The impact of quantitative easing

Figure 5: Bank of England: Combined Balance Sheet (percent of nominal GDP)

‘Deed of Indemnity’

Chapter 3: The Bank’s remit

Evolution of the Bank’s remit

Justification for extended remits

Consequences of extended remits

Doing too much?

Risks to independence

Conflicting objectives

Implications for the Bank’s management

A central bank digital currency

Chapter 4: Diversity of thought and culture

Diversity of thought

The Bank’s approach to inflation post-2020

Figure 6: UK bank rate versus CPI and M4: January 2020 to January 2022

Figure 7: 12-month growth rates of M4ex and M4Lex

Forecasting

Figure 8: Bank of England CPI inflation forecasts versus inflation outcomes

Appointments

Role of the Court of Directors

Reform of the Court

Chapter 5: Accountability

Accountability and the role of Parliament

The Independent Evaluation Office

Summary of conclusions and recommendations

Appendix 1: List of Members and declarations of interest

Appendix 2: List of witnesses

Appendix 3: Overview of the Bank of England’s remit

Box 1: Bank of England remit

Appendix 4: Overview of the remits and recommendations for the Bank of England policy committees (2022)

Box 2: MPC remit 2022

Box 3: FPC remit and recommendations 2022

Box 4: PRC recommendations 2022

Appendix 5: Bank of England organogram (November 2023)

Appendix 6: Bank of England Court of Directors and policy committee membership

Appendix 7: UK regulatory architecture (with a focus on the Bank of England)

Evidence is published online at https://committees.parliament.uk/work/7356/bank-of-england-how-is-independence-working/publications/ and available for inspection at the Parliamentary Archives (020 7219 3074).

Q in footnotes refers to a question in oral evidence





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