In 1997, the Bank supposedly went independent. Of course, a central bank by its very nature is anything but independent. Ask Goldman Sachs.
However the Chancellor of the Exchequer is still required by law to give advice to the Bank – so what is it? Give “due weight to the impact of its actions on the near-term economic recovery”, and “sustain growth”. Not really the warning I was hoping for.
The implications are simple enough: stop asking banks to shore up capital (and by proxy, lend less he says) and get on with building the economy. By saying this Osborne flies in the face of Basel III, public opinion, and common sense. It is time for politicians to grow some spine and stop thinking of the near-term, as Osborne calls it (most would call it short term), and focus on the real problems that banks face – in particular one on Threadneedle Street.