As the Bank of England was in no hurry to tighten monetary policy to combat high consumer inflation, Liz Truss, the leader in the race for the post of the next prime minister, criticized politicians and promised to review his powers. Against this background, there were suggestions that the Bank could lose its independence.
However, Gordon Brown - the former British Prime Minister and the man who granted the Bank its operational independence in relation to policy in 1997 - said that such a development could be a "very serious mistake."
"I agree that the Bank of England should have tightened policy more actively to curb high inflation, but this does not mean that we should deprive the Bank of independence, as this would be a very big mistake," Brown said.
Last Thursday, the Bank of England raised interest rates by 50 basis points, the biggest one-time increase since 1995, as it tries to rein in inflation, which hit a new 40-year high in June. This step was largely expected by market participants. The sixth consecutive rate hike pushed the cost of borrowing to 1.75%.