Bank’s independence is sacrosanct, says new chancellor Kwasi Kwarteng

The Chancellor declared yesterday that the Bank of England’s independence is ‘sacrosanct’ on his first full day in the job.

Kwasi Kwarteng met governor Andrew Bailey, and the pair agreed that they would convene twice a week to coordinate support for the economy.

The Bank of England has come under fire as inflation soared to more than 10 per cent, five times higher than its target of 2 per cent.

Prime Minister Liz Truss said during her campaign for the Tory leadership that she intended to review its mandate to ‘make sure it is tough enough on inflation’.

However, over the weekend during a BBC interview, she said that she was a ‘great believer in the independence of the Bank of England’ and its job in taming inflation.

Kwarteng said in a tweet yesterday after meeting Bailey: ‘The Bank’s independence is sacrosanct as we work together to overcome cost of living challenges.

‘I’ve reinstated regular meetings with the governor – initially bi-weekly – to coordinate our ongoing response.’

A Treasury spokesman said previous chancellors had also met regularly with the governor but the new arrangement formalised the arrangement.

The Government said Kwarteng and Bailey ‘would coordinate closely to support the economy over the coming months’.

Earlier, the governor told MPs on the Treasury Committee that it was good practice ‘from time to time’ to have a review of the Bank’s remit.

The Chancellor also met bosses from 14 banks and financial firms and told them the Government would pursue an ‘unashamedly pro-growth agenda’ –with more borrowing likely for now to address the cost of living squeeze.

Kwarteng said in a tweet yesterday after meeting Bailey: ‘The Bank’s independence is sacrosanct as we work together to overcome cost of living challenges’

The Government is preparing to unveil a £100billion-plus energy bills squeeze to avert a major crisis for millions of households this winter after Russia’s invasion of Ukraine sent gas prices soaring.

Among the bosses wooed by Kwarteng yesterday were the leaders of UK-based banks HSBC, Lloyds, Natwest and Barclays as well as top executives from foreign-owned lenders including Goldman Sachs and UBS.

Others attending included leading executives of London Stock Exchange Group and insurer Legal & General.

Kwarteng – who was business secretary under Boris Johnson – told them the Government’s immediate priority would be to support families and businesses squeezed by the cost-of-living crisis, which meant ‘necessary higher borrowing in the immediate term’.

But further out he committed to keeping debt as a proportion of GDP ‘on a downward path’, a Treasury spokesman said.

The Chancellor also said that economic growth has been too low and pledged a ‘radical supply side agenda’.

That will mean encouraging investment and innovation and cutting red tape and taxes, in order to create jobs and wealth and drive growth, the Government’s spokesman said.

Kwarteng said: ‘We face extraordinary economic challenges in the coming weeks and months and I know that families and businesses across the UK are worried.

‘The Prime Minister and I are committed to taking decisive action to help the British people now, while pursuing an unashamedly pro-growth agenda. We need to be decisive and do things differently.

‘That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left.’