Liz Truss: Bank of England mandate should be reviewed after inflation failures
Former Prime Minister Liz Truss reiterated her claim that the Bank of England should have its mandate reviewed after its failure to get a grip on inflation.
In response to a question from Morning Wire about the Bank’s independence, Truss said she would like to “see the mandate improved”.
Truss criticised the Bank for failing to raise interest rates earlier, which she claimed was a “major factor” in contributing to the financial meltdown prompted by her mini-budget.
Many figures from across the political spectrum have criticised the Bank, both for failing to raise interest rates quickly enough and for lifting them too high.
Earlier this year, members of the House of Lords launched an investigation into the independence of the Bank of England, particularly focusing on accountability structures.
Truss suggested that part of the reason the Bank failed to get a grip on inflation was that it was “not focused enough on the money supply…that has been an absolutely key issue.”
Truss’s comments came in her first major speech since resigning as Prime Minister and set out wide ranging criticisms of a number of public bodies, including the Office for Budgetary Responsibility (OBR) and the wider civil service.
“Of course politicians should be held accountable and responsible for what we do, but when there are people with significant power, I don’t feel that the same questions are necessarily asked about them,” she said.
More broadly, she claimed that the Sunak’s failure to deliver supply side reform risks lengthening a 25 year ‘economic consensus‘ that has seen growth in much of the west stagnate.
Truss, who defended her time in office at the briefing, attempted to push through an aggressive tax reforms package as Prime Minister.
This massively backfired after a sharp rise in the cost of UK debt almost sent a host of so-called LDI funds into meltdown.
Although she holds little to no influence over the current government, her brand of free market conservatism is likely to be a key force vying for control of the party should the Conservatives lose the next election.
She said that “winning the argument” against the ‘anti-growth’ coalition – both within and beyond the Conservative party – was one of the main reasons for delivering her speech today.
The Bank of England declined to comment.