Carney defends Bank of England independence

Mark Carney has defended the independence of the Bank of England, and criticised Jeremy Corbyn’s economic policies.

Speaking to the Tresury Select Committee (TSC) yesterday, Carney said that the BoE is the right model for the UK and has independence from the Government, the Financial Times reports.

His comments come as new shadow chancellor John McDonnell, appointed by Corbyn this week, proposed bringing the interest rate setting decision into the government and scrapping the Bank of England.

In a Labour victory, he claimed that one of his first tasks would be getting rid of the Bank of England and that its presence has “simply meant democratic government decisions [are] being replaced by the influence of short-sighted bankers”.

However, Carney defended the Bank’s current structure, saying that the Chancellor’s influence over the bank would only occur in extreme circumstances.

“The construct here, with a central bank that has operational independence to achieve a mandate that is defined by parliament, is the right model,” he told the TSC.

Earlier this year Monetary Policy Committee member Martin Weale also previously defended the BoE’s indepdence, saying it is “a cornerstone of credible policy making, which ensures that the public have faith that it is free of political interference”.

The governor also ruled out more aggresive quantitative easing, saying now was not the time for such measures as the economy is growing. 

“My personal orientation and the orientation of the committee is that the next move for monetary policy is likely a tightening,” he said.

Carney reiterated his view that the time for any interest rate rise will become more clear at the end of this year and start of 2016, saying that the recent China fallout should not affect the decision.