Andrew Bailey recently claimed that the Bank of England has saved the government £125 billion. The Bank’s governor was responding to criticism from Reform deputy leader Richard Tice that the Old Lady of Threadneedle Street has cost taxpayers a fortune. Just weeks earlier, Reform leader Nigel Farage questioned the very idea of central bank independence, suggesting he might replace Bailey if he became prime minister. So is the Bank of England too independent for its own good?

Independence, once a shield against politics, has become a licence for technocracy

The concept of central bank ‘independence’ has certainly morphed into something it was never intended to be. Independence wasn’t about granting unelected officials unlimited discretion, but protecting monetary policy from political interference and from the hubris of the Bank itself.

The story begins in postwar America. After the Second World War, Washington had a deficit problem. The Treasury wanted the Federal Reserve to keep interest rates artificially low to help finance those deficits. But inflation was rising fast, and the Fed wanted to raise rates. President Harry Truman and Treasury Secretary John Snyder resisted, determined to keep borrowing costs down. Fed Chair Marriner Eccles refused to yield. This led to the 1951 Treasury–Fed Accord, which established the Fed’s autonomy to pursue........

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