Reform UK’s Nigel Farage and Richard Tice are set to challenge Bank of England Governor Andrew Bailey on monetary policy at a showdown meeting today, with instability from quantitative tightening (QT), stablecoins regulation and interest rate-setting set to be raised as subjects of discussion.
Farage and Tice are set to sit down with the Bank of England Governor to talk over the Bank’s recent decisions, with a meeting last week keeping interest rates at four per cent and slowing down QT in light of febrile markets.
Major central banks have dumped government bonds at a lower price to reduce the size of its balance sheet, though the Bank has received heavier criticism for selling gilts at a faster pace and at a lower price – at the expense of taxpayer cash.
Tice wrote to Bailey this summer to claim that commercial banks were earning excess profits as it took up bonds from the Bank, claiming it reflected a “systemic misuse of taxpayers’ money”.
The Bank of England Governor defended its bond-selling scheme as it would “keep the benefit of lower debt costs for considerably longer than other countries”.
The Bank has not calculated the total losses to the Treasury from the scheme. The Office for Budget Responsibility (OBR) has indicated that the programme is costing taxpayers around £18bn a year.
Monetary Policy Committee (MPC) members have disagreed on whether the pace of QT should have been slowed down from £100bn in the last year to £70bn next year.
Chief economist Huw Pill, who voted for the pace of QT to be maintained, said the Bank should send a consistent message to markets and not take into account potential costs incurred by the Treasury.
Farage’s first meeting with Bailey
Bailey and the Reform UK leaders are also set to go head-to-head on the Bank’s independence.
Both have said that intervention on the Bank’s independence would be considered if Reform were elected, a move which would represent the biggest change to monetary policymaking in the UK since Tony Blair was elected in 1997.
Tice has endorsed the view that at least one Treasury official should sit on the Monetary Policy Committee (MPC).
Some Labour members have taken the same view. Bailey told MPs on the Treasury Committee that the independence of central banks was to “provide foundations” and financial stability for politicians to take decisions on tax and expenditure.
Bailey will also be pressed on his cautious approach to stablecoins as he has warned banks against issuing their own crypto assets, with Farage and Tice championing its potential for boosting the City.
Farage suggested Bank officials were “dinosaur bureaucrats” in an opinion piece for the Daily Telegraph.