Experts join concerns over Private Banksters of England and OBR "independence"

By Asa Bennett: Tory MP Mark Field’s fierce attack on the OBR and Bank of England for being “manipulated” by the Chancellor, and his suggestion the BofE is being “overriden” by the government to keep interest rates low, hase received support from economic commentators.
Field’s concern about the OBR’s independence and whether it could be in the “pocket of the government” has gained weight following comment from a senior Labour politician.
John Mann MP, member of Parliament’s Treasury Select Committee, said: “Of course the OBR is terrified of moving outside Treasury ‘groupthink’ - hence its repeated overstating of growth in its predictions.
“The consequence of this is higher inflation, and this is an increasing problem - what I call the Japanisation of our economy”.
Max Keiser, the outspoken financial presenter on the Russia Today TV channel, told LondonlovesBusiness.com that he agreed with Field’s concerns about the Bank’s independence.
Asked if he thought Field was right in asserting the BofE had an “arrangement” with the Chancellor to keep interest rates low, he said: “What we learned from the Libor scandal is that the Bank of England works with private banks to rig LIBOR rates; a multi-hundred trillion dollar global market that underlies virtually all markets, so the answer is ‘yes,’ sadly’”.

Sam Bowman, research director at the Adam Smith Institute, said: “The base rate for the Bank of England is not so much conspiracy as they’ve explicity made it 0.5%, so that is deliberate. It is a deliberate policy in the sense that it’s a deliberate policy to have an NHS. They’ve said they wanted to bring the interest rate down to 0.5%, and they’ve done it.
“If they didn’t have to bear any kind of political scrutiny, they would come out and say we’re going to allow inflation to be high because we think it’d be bad to bring it down to target, obviously what they have to say is stuff about “trying to intervene with these fluctuations would be against [our policy].”
This comes after Field told LondonlovesBusiness.com that there was “clearly an arrangement between Osborne and Mervyn King” to keep interest rates low “partly because the worry is that a relatively modest increase in those interest rates would have a catastrophic effect on the amount of debt for some companies and some individuals”. “We have now missed, for 39 consecutive months, our inflation targets. They’re almost meaningless,” he said.
Field added that the “deliberate policy” has existed for more than the “last three to four years, predating the coalition”.
“The independence of the Bank of England is being overridden as far as interest rates are concerned, maybe with some perfectly good political objectives in mind but the public should be at least informed of that in this crisis situation,” he said.
Professor Philip Booth, from Cass Business School and the Institute of Economic Affairs, backed Field’s concerns about the Bank’s decision to keep interest rates low, saying: “A side effect of QE and low interest rates is, indeed, likely to be to prolong the length - whilst reducing the depth - of the recession by keeping interest rates to existing borrowers low.”
“The Bank of England has missed its inflation target and expects to miss it going forward. Given this, it is difficult to understand how it can not adjust monetary policy.”
Financial writer, and former UBS and RBS banker, Frances Coppola, gave qualified backing to Field’s comments, saying there were “convergent interests” rather than “actual cooperation” between the Treasury and the Bank of England in “keeping interest rates low in order to prevent banks going bust” as “the Treasury doesn’t want another bailout, and the Bank of England is responsible for financial stability”.
Professor Tim Besley, former member of the Bank of England’s Monetary Policy Committee, refused to be drawn specifically on Field’s comments but said “these debates are interesting”.
LondonlovesBusiness.com approached the Bank of England, the Treasury and CCHQ for a response to Field’s comments but no spokesperson from any of the organisations was available for comment.
Senior Tory MP John Redwood also declined to comment. However, he wrote a blogpost in 2007 questioning the Bank of England’s independence in controlling inflation and interest rates, in which he concluded: “The Bank and the system are not independent enough”.

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