UK lawmakers launch inquiry into BoE independence

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FILE PHOTO: A person smokes a cigarette outside the Bank of England in the City of London financial district, in London

LONDON (Reuters) - British lawmakers launched an investigation on Friday into the independence of the Bank of England, which some politicians appeared to challenge last year during the brief tenure of former prime minister Liz Truss.

The Economic Affairs Committee (EAC) of the House of Lords, the upper chamber of parliament, said the inquiry would not review policy decisions but wanted to look at the BoE's role and remit, as well as its governance and accountability structures.

Truss said during her campaign for the leadership of the Conservative Party last year that she planned to hold a review of the BoE's mandate. One of Truss's supporters, Suella Braverman, who is now Britain's interior minister, said the review would consider the central bank's independence.

Truss resigned after less than two months into her term as her economic policies sparked mayhem in financial markets. No government review of the BoE was conducted.

In 2021, the EAC concluded as part of a review into quantitative easing that the scale of the BoE's purchases of government debt during the COVID-19 pandemic had "started to erode the perception that the Bank has acted wholly independently of political considerations".

The committee said it would seek views on questions including on the relationship between the BoE and Britain's finance ministry, whether appointees to key committees had the right kind of expertise and the clarity of BoE communications.

Former BoE governor Mervyn King and Andrew Turnbull, the top civil servant at the Treasury between 1998 and 2002, are among the members of the EAC.

The BoE was granted independence on monetary policy in 1997. Legislation setting out those powers was enacted in 1998, making this year the 25th anniversary of the bill.

(Reporting by William Schomberg; Editing by David Milliken)