Bank of England Governor Andrew Bailey reacts during the Bank of England Financial Stability Report press conference, at the Bank of England, London, August 4, 2022. Yui Mok/ Pool via REUTERS

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LONDON, Aug 5 (Reuters) – Bank of England Governor Andrew Bailey has pushed back against suggestions by Liz Truss and her supporters to become Britain’s next prime minister that the government should play a bigger role in the functioning of the central bank.

With inflation on track to top 13% later this year, Truss promised a review of the BoE’s remit and said she wanted to set “a clear direction” for monetary policy.

A Truss ally, Attorney General Suella Braverman, said the review would challenge the BoE’s exclusive powers to set interest rates. Read more

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Bailey said central bank independence was “crucially important” in a BBC radio interview aired on Friday, a day after the BoE raised interest rates to their highest since 1995 and expected a long recession. Read more

“In fact, from what I see, I don’t think there’s a great desire in this country to question central bank independence,” he said.

“But I’m very happy to discuss with the new government, you know, the details and the nature of the regime in place.”

Bailey said he would complete his term in the post which is due to end in 2028.

“I made a commitment. It’s an eight-year term and it’s the part of the fabric of the Bank of England’s independence that doesn’t change with changes of government, changes of opinion” , did he declare.

Bailey also took issue with a chorus of criticism from BoE Truss supporters for raising rates too late to deal with soaring inflation.

“There are certain points where yes, I will say ‘I’m sorry, I disagree with that point,'” he said when asked how he would respond to politicians’ claims according to which the BoE had made mistakes in its response to inflation.

Earlier on Friday, Business Minister Kwasi Kwarteng, who backs Truss, leveled fresh criticism at the BoE.

“If your target is 2% and you are predicting 13%, something is wrong. And you have to look at how the bank is organized and what the targets are,” he told Sky News.

Asked if the BoE would retain its independence in a Truss-led government, Kwarteng said: “It will absolutely retain its independence.”

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Reporting by William Schomberg, editing by William James

Our standards: The Thomson Reuters Trust Principles.