MPs have launched a major inquiry into whether the framework underpinning the Bank of England’s monetary policy independence remains fit for purpose almost 30 years after it was introduced.
The House of Commons Treasury Committee announced the review on Thursday, saying it will examine how independence has affected inflation, economic credibility and the wider wellbeing of people in the UK.
The inquiry will also consider whether the Bank has ever exceeded its monetary-policy remit, whether governments or Parliament have undermined its independence, and whether changes are needed to the existing system.
Bank independence approaching 30 years
The Bank of England was given operational independence over monetary policy in 1997, initially allowing it to set interest rates independently through the Monetary Policy Committee.
Since 2009, the Bank’s monetary-policy toolkit has also included quantitative easing and, more recently, quantitative tightening.
The Treasury Committee said the structure of the UK economy has changed substantially during the intervening three decades and MPs now want to examine whether the framework remains appropriate.
Inflation averaged 2.5% since independence
According to figures highlighted by the committee, CPI inflation has averaged 2.5% since Bank independence, compared with 7.3% between 1967 and 1997.
However, MPs also noted that national debt is considerably higher than it was three decades ago and that inflation has remained above the Bank’s target for much of the past five years.
The inquiry will investigate whether monetary-policy independence has produced better outcomes for price stability, inflation expectations, the credibility of the UK’s macroeconomic framework and the economic wellbeing of the public.
MPs ask whether Bank has become 'too independent'
Among the questions being considered is whether monetary-policy independence remains robust in practice.
The committee will examine whether there have been areas where the Bank has exceeded its remit or monetary policy has become too independent of government. It will also consider whether governments or Parliament have at times undermined the Bank’s independence.
MPs will investigate how effectively the Bank, Government and Debt Management Office work together on monetary policy and debt management when coordination is required.
QE, interest rates and value of sterling under scrutiny
The inquiry will examine quantitative easing and quantitative tightening and whether those policies strengthen or weaken the case for an independent central bank.
It will also consider whether the Monetary Policy Committee’s remit remains fit for purpose, whether the committee has an appropriate diversity of views and expertise, and whether the Bank has given sufficient weight to the value of pound sterling.
The Bank’s economic forecasting and communications reforms following the 2024 Bernanke review will also form part of the inquiry.
Hillier calls for 'robust debate'
Treasury Committee chair Dame Meg Hillier said the country and global economy had changed significantly since the Bank was given responsibility for setting monetary policy independently.
She said the central questions were how the system was working and whether it remained fit for purpose nearly three decades later, calling for a robust debate about the operation of Bank independence.
The committee is inviting evidence, with submissions due by Friday 6 November 2026.
The launch of the inquiry does not mean MPs have proposed ending Bank of England independence. Instead, the committee is examining how the framework has operated and whether changes may be required.