Liz Truss appeared to soften her stance on the Bank of England’s level of independence today as the Tory party prepares to crown a new leader and Prime Minister.
Truss, the presumptive next Prime Minister, said she was a “great believer” in the Bank of England’s independence and that she would not “countermand to the Bank of England”, after taking a series of jabs at the Old Lady over the past month.
Truss spent parts of the campaign calling for the Bank’s mandate to be changed in the wake of claims from her camp that its £450bn Covid Quantitative Easing programme fuelled inflation.
Her supporters have also said Truss is in favour of new rules that will allow ministers to overrule regulatory decisions on financial services made by the Bank of England.
These incidents led to Bank of England governor Andrew Bailey writing to a Westminster committee to warn that “regulatory independence is important, not least because our international standing, and therefore the competitiveness of the UK financial sector … depends on it”.
Truss yesterday told the BBC today: “I’m a great believer in the independence of the Bank of England. We need to allow the Bank of England to do that job.”
Her comments may be perceived by Bank of England officials as an olive branch for Bailey and the central bank on the eve of her premiership.
Tom Clougherty, research director at the free market Centre for Policy Studies (CPS) think tank, said he was doubtful “Truss has softened her stance on the Bank of England”.
“When the time is right, I do still expect Truss to look again at the Bank’s mandate,” he said.
“There’s nothing sacrosanct about the current regime and many believe we could do better.”
The winner of the Tory party leadership contest will be announced at a Westminster function centre at 12.30pm tomorrow.
The winner will see the Queen at Balmoral on Tuesday and return immediately to Number 10 to appoint a cabinet.
The Sunday Times reports that a potential Truss cabinet will be filled almost entirely with close campaign supporters, with MPs like Kwasi Kwarteng, James Cleverly and Suella Braverman set for top jobs.
Senior Tory David Davis yesterday told Sky News that it would be a grave mistake to not bring in MPs from across the party’s factions into cabinet.
“There is a real risk the party will feel divided [after tomorrow’s result] and if that’s the case we won’t win the next election, so it’s going to be really important she pulls people in,” he said.