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Bank of England's chief economist criticises Liz Truss

LONDON, UNITED KINGDOM - OCTOBER 25: Outgoing British Prime Minister Liz Truss gives a final speech outside 10 Downing Street before travelling to Buckingham Palace to meet King Charles III and officially resign as Prime Minister of the United Kingdom in London, United Kingdom on October 25, 2022. (Photo by Wiktor Szymanowicz/Anadolu Agency via Getty Images)
The outgoing British Prime Minister Liz Truss has been criticised for her lack of cooperation with the Bank of England. Photo: Wiktor Szymanowicz/Anadolu Agency/Getty (Anadolu Agency via Getty Images)

The Bank of England’s chief economist has criticised the lack of cooperation from Liz Truss’s government, with Trussonomics many times at odds with the BoE.

Speaking at an Office for National Statistics (ONS) conference, Huw Pill highlighted the good cooperation between the BoE and official statisticians.

"That's a model for how macro policymakers in the UK should respect the institutional framework when they interact with one another," Pill said.

"In my view, we might have benefited in recent weeks if the interactions amongst other institutions had followed that pattern."

Read more: FTSE 100: HSBC profits jump by $1bn boosted by rising interest rates

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The Bank of England and the government of outgoing prime minister Liz Truss often seemed to be going in opposite directions during the 44-day reign of Trussonomics.

Kwasi Kwarteng’s mini-budget laid out a strategy to spur growth by cutting taxes for the rich and stimulating spending. This put the government on a collision course with the Bank of England, as the central bank was raising interest rates and about to start a round of quantitative easing – where it takes money out of the economy – in order to bring inflation down.

The former governor of the Bank of England Mark Carney accused Liz Truss’s government of “undercutting” the country’s economic institutions and working at “cross purposes” with Threadneedle Street.

The Bank was forced to step in with a £65bn emergency bond-buying programme as part of efforts to quell a market meltdown, which risked draining pension funds of cash and leaving them at risk of insolvency, following the mini-budget.

Read more: FTSE slips lower as Rishi Sunak prepares to take over as UK prime minister

In July, Truss wanted to review the BoE’s mandate and called for ministers to give the bank “a very clear direction of travel on monetary policy”. But after arriving at Number 10, she pledged her support for the bank’s independence, saying “it is the Bank of England’s job to bring inflation down”.

UK households face the biggest interest rate rise for 30 years as the Bank steps up its battle against inflation.

In a move that will drive up borrowing costs for millions, the central bank is widely expected to raise its base rate by 0.75 percentage points on November 3. That would be the biggest rise since Black Wednesday in 1992.

The current interest rate stands at 2.25%.

Watch: How does inflation affect interest rates?