Tory MP Jacob Rees-Mogg claims the Bank of England “fundamentally undermines” its independence by forecasting the potential impact of a Brexit on the economy.
The Bank of England warned in May’s inflation report that the referendum on Britain’s European Union membership is the “most significant risk” to the British economy, with governor Mark Carney saying that risks “could possibly include a technical recession.”
In a tetchy exchange at the Treasury Select Committee session on Tuesday, Rees-Mogg told Governor Mark Carney: “By getting involved in the details of something that is more important than a general election, that fundamentally undermines the standing of the Bank of England and it’s appearance of independence.”
Rees-Mogg argued that it is highly unusual for the Bank of England to take a view on the impact of the EU membership referendum, given that it does not forecast the impact of Labour or Tory policies in the run-up to a general election.
An exasperated Carney replied: “What you’ve missed is that we are dealing with is something that will have a prospective impact on our ability to discharge our remit. We are obliged — it is political to ignore it.
“If we are changing policy, as the Bank of England has — we have changed out liquidity policy, we have changed our supervisory policy, we might have to change or monetary policy in pursuit of our remit. We have an obligation to disclose that.”
Rees-Mogg countered: “All of that applies to the economic policies of an opposition party.”
Carney replied: “I can’t think of a case where the Bank of England has changed any of those policies in advance of a general election and yet we are in that circumstance with respect to this vote. And that is what you’ve missed.”
Rees-Mogg said: “I think you have become politically involved.”
Carney, giving up, looked at Treasury Select Committee chair Andrew Tyrie and said: “I don’t think it’s worth replying.”
It’s not the first time Rees-Mogg, a staunch Vote Leave supporter, has attacked Carney over the Bank of England’s position on the referendum. In March he accused the Governor of making “speculative pro-EU comments” that are “beneath the dignity of the BoE.”
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