Nov 27, 2023 - Economy

The House of Lords thinks the Bank of England should be more democratic

Neil Irwin

The Bank of England. Photo: Daniel Leal/AFP via Getty Images

It was to be expected that the outburst of inflation during the last three years would trigger a wave of second-guessing the decisions of major central banks. After all, it is their job to keep inflation under control.

Now it's the Bank of England's turn, with a small dose of irony.

Driving the news: In a new report out Monday morning, the Economic Affairs Committee of the U.K. House of Lords criticized Britain's central bank for a lack of intellectual diversity and inadequate oversight, even as its responsibilities have widened.

There are plenty of worthwhile points in the report, many of which could be equally applied on the U.S. side of the Atlantic. It notes, for example, that quantitative easing muddies the water between fiscal and monetary policy.
Still, one particular strain of criticism struck us as surprising, given the source.

What they're saying: "Independence and accountability should go hand in hand," said Lord Bridges of Headley, chair of the committee, in a statement.

"At the moment, we are suffering from a democratic deficit," he said, from his position in a body comprising 784 sitting members, zero of whom were elected to their peerage.

Between the lines: There's an irony in the House of Lords taking up the pro-democracy mantle. Yet making the bank more democratic — that is, more influenced by elected officials — would likely make some of the other problems the report noted, such as mission creep, worse.

Of note: Separately, former Fed chair Ben Bernanke is at work on a review of the BoE's policy processes, commissioned by the bank itself.

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The House of Lords thinks the Bank of England should be more democratic

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