Haldane Defends BOE Independence When Quizzed on Corbyn

  • BOE chief economist pulled into political controversy
  • Independence of central bank is `precious and important'

Bank of England Chief Economist Andy Haldane said that central banks should stay independent as he was pulled into the political controversy over the election of Jeremy Corbyn as opposition Labour Party leader.

"One of the really important parts of doing my job is to try and stand aside from politics,” Haldane said in an interview with BBC Radio Ulster during a visit to Northern Ireland on Friday. “That is why this independence thing is so precious and important."

Corbyn, overwhelmingly elected by party supporters last week, has suggested "People’s QE" -- wherein the Bank of England would print money to fund politically directed infrastructure projects -- as a means to solve issues including the housing crisis. He appointed an opponent of BOE independence, John McDonnell, as the party’s Treasury spokesman.

McDonnell, who organized Corbyn’s campaign for the party leadership, favors ending the BOE’s control over interest rates to regain "democratic control" over economic decisions, according to a 2012 document setting out his vision of the first 110 days of Labour power.

Asked about the policies, Haldane said central-bank independence "is a model that has served us and many other countries rather well over the past few years, and I think we ought to be very cautious about any unpicking of those arrangements."

"We have seen over the course of the last 15 years in this country, and longer in many countries, the benefit that comes from interest rates being set by central banks rather than by politicians, who necessarily are tempted at times of elections to do different things," he said.

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