The UK Parliament’s Treasury Committee is scheduled to hold an inquiry next year into the effectiveness of Bank of England polices since the financial crisis in 2008.
In response to the recession eight years ago the BoE reduced interest rates to record lows and carried out a massive quantitative easing (QE) bond-buying program. It recently boosted its stimulus program after the UK voted to leave the EU in June.
Andrew Tyrie, the Conservative MP who heads the committee, said:
“Interest rates are stuck near zero, the Bank of England has used increasingly unconventional forms of quantitative easing, and inflation has been below the two per cent target for three years.”
“The efficacy of monetary policy or otherwise, its unintended consequences, and its prospects, need careful examination.”
Mr Tyrie added: “The Treasury Committee will continue to act as a safeguard on the operational independence of the Bank. The Treasury indemnity, which underpins parts of the Bank’s monetary policy, could all too easily encourage the Treasury, or politicians, to put undue pressure on the Bank.
“The Committee will examine the risks of that, too.”
Prime Minister Theresa May has also challenged the central bank’s ultra-low interest rate policies.
In October, Theresa May said that emergency measures taken by the Bank of England since the financial crisis have caused “some bad side effects”.
“While monetary policy, with super-low interest rates and quantitative easing, provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects,” the prime minister said.
“People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer. A change has got to come. And we are going to deliver it.”