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Repeal The Bank of England Act 1998

Comment 17th August 2010

The Bank of England Act 1998 gave the bank's Monetary Policy Committee sole responsibility for setting interest rates to meet the Government's inflation target – currently a Consumer Price Index (CPI) rate of 2%. Allegedly (according to the Bank of England)  this meant that "interest rates would no longer be set by politicians … The Bank would be accountable to parliament and the wider public."  Throughout 2010 the Bank has failed to achieve its target. Mervyn King has admitted he doesn't know what will be happening next and the Bank's forecasts have proven to be persistently inaccurate. Neither did the Bank do anything whatsoever to foresee/forestall the banking crisis which arose.

At the same time the pensions (accrued and accruing) and savings of everyone in the UK is eroding in value as the Bank fails to control inflation and interest rates are kept artificially low. There is no real accountability of the Bank to the "wider public."

What therefore is the point of persisting with this arrangement? Give the responsibility for monetary policy back to Politicians – they can use whatever advisers they want to help set interest rates etc but at least the policy objectives will be clearer and Politicians DO have accountability to the wider public.

Why does this matter?

The Bank of England is another quango. It is not accountable to the wider public and is clearly failing in the tasks with which it has been entrusted by Parliament.  If it was any other body there would be action and redress.

Restoring the direct link between monetary policy, politiicians and the wider public would introduce accountability and reduce costs.

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