BoE responds to criticism on interest payments
Governor defends monetary policy tools following attacks by political party
The Bank of England published a formal response yesterday (June 23) to criticism from a political party of its policy of paying interest on reserves and its approach to selling government bonds.
In the letter to Reform UK’s deputy leader Richard Tice, BoE governor Andrew Bailey clarified that paying interest on reserves was not an arbitrary subsidy, but rather a key tool to implement monetary policy effectively.
He said the practice anchored short-term interest rates, which in turn supported the
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