LONDON ― Andrew Bailey should be sacked as governor of the Bank of England and a politician should be put in charge of setting monetary policy instead, former U.K. Prime Minister Liz Truss argued.
Interest-rate setting is a “political decision” and “should be in political hands,” Truss told LBC Radio in an interview to be broadcast later.
Truss, the U.K.’s shortest-serving PM whose 49-day premiership was outlasted by a lettuce, is promoting her new book: “Ten Years To Save The West.”
Excerpts were released over the weekend and include a scathing view of Britain’s financial establishment. She describes the Treasury, the Bank of England and the Office for Budget Responsibility (OBR) as a “three-headed hydra” that “wanted to stick as closely to EU law as possible.”
But the now-backbench MP went further in the interview, saying Bailey should no longer lead the U.K.’s central bank. She also said she would “like to see the back of the OBR” and called for an investigation into the response to her infamous “mini-budget” in Sept 2022, which resulted in the BoE having to step in to calm markets.
Asked whether she thinks Bailey should still be in his role, Truss said: “No, I don’t. I certainly think there should be a proper investigation into what happened in September 2022. And the actions the Bank of England took.”
Truss was forced to resign soon after the budget, in which she announced tax cuts for Britain’s wealthiest and opted not to publish the usual economic forecasts from the OBR. Markets spiraled in the wake of the statement and the pension fund industry nearly collapsed. The BoE stepped in with a £65 billion emergency facility to restore calm.
But Truss told LBC that the reaction to her plan has been a “smear.”
“Britain’s economic growth has not been enough and whatever mistakes I may have made, and I’m not saying I haven’t made mistakes, I did not cause Britain’s lack of economic growth. I tried to fix it. I tried to start the process of fixing it,” she said.
The decision by Labour’s then-Chancellor Gordon Brown in 1997 to make the BoE independent means it is “very hard to move a governor of the Bank of England on,” Truss said, adding she believes “big mistakes have been made with monetary policy.”
“I’m not advocating going back to the situation, pre the independent Bank of England, where chancellors were setting interest rates. But I do think that democratically elected ministers should be responsible for managing fiscal and monetary policy.”
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