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MPs plan to scrutinise Bank of England policy

Published 22/12/2016, 11:10
© Reuters. People walk in front of the Bank of England in the City of London

LONDON (Reuters) - Parliament's Treasury Committee is to examine the effectiveness of Bank of England policies since the 2008/09 global financial crisis, criticised by Prime Minister Theresa May earlier this year for hurting savers.

The BoE slashed interest rates to record lows and embarked on a massive bond-buying programme to counter the deep recession eight years ago, and further expanded its stimulus after Britain voted to leave the European Union in June.

The Treasury Committee said on Thursday it would look at the "unintended consequences" of BoE policies and whether they have been effective in controlling inflation.

"This doesn't necessarily mean that a BoE mandate change is on the way anytime soon but it does tie in with the theme Theresa May outlined in her Conservative conference speech," said Jordan Rochester, foreign exchange strategist at Nomura.

In October, May highlighted the "bad side-effects" of low interest rates and quantitative easing, adding that "a change has got to come".

© Reuters. People walk in front of the Bank of England in the City of London

BoE Governor Mark Carney retorted that the central bank would not take instruction from politicians on how to operate. He has also stressed that governments, not central banks, are ultimately responsible for the creation of jobs, wages and wealth.

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