Ex Fed official says Bank of England ‘contributed to the Truss govt’s demise’
A top former official with the US Federal Reserve has claimed the Bank of England ousted Liz Truss.
Narayana Kocherlakota, the ex president of the Federal Reserve Bank of Minneapolis, made his comments in a piece for Bloomberg this week.
This comes after Truss left office following weeks of chaos in UK financial markets sparked by her botched mini-budget that left her premiership in tatters.
Markets cooled since last month’s £45bn tax cutting mini-budget, with sparked a huge bond sell off by the Bank of England and a collapse in the pound.
Yields on the 30-year gilt hit their highest level in over 20 years on 23 September, but have since curbed.
In his piece, Kocherlakota, who is now a senior academic, said the Bank of England’s “regulatory failure” forced it “into an emergency intervention, buying gilts to put a floor on prices.”
“But it refused to extend its support beyond October 14, even though its purchases of long-term government bonds were fully indemnified by the Treasury.
“It’s hard to see how that decision aligned with the bank’s financial-stability mandate and easy to see how it contributed to the government’s demise.”
The Bank of England declined to comment on his remarks, pointing to written statements and letters sent by Sir Jon Cunliffe, the Bank’s Deputy Governor for Financial Stability.
Letters include the Bank’s plans being outlined to Mel Stride, who is chair of the Treasury Committee in Parliament, as well as detailed oral evidence to the committee on 19 October.
Truss resigned on 20 October.