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New Labour and Monetary Policy

Gordon Brown moved, immediately after the election, to give the Bank of England independence from the Treasury to set interest rates in order to give more confidence to the money markets about the Government’s economic policy.

The Bank of England Act, 1998, gave power to set interest rates to a Monetary Policy Committee of economic experts within the overall objectives of Government policy and particularly to keep inflation low.

In recent times some have claimed the Bank of England, in particular under the tenure of Governor Mark Carney, has become more politicised.

This was highlighted during the UK referendum on membership of the EU in June 2016 where some believed the doom and gloom forecasts and comments made about the consequences of leaving the EU represented a cross-lined into politics rather than economics during the campaign. Some Conservative MPs even called for Carney’s resignation.