Part 8/10:
Despite this narrative, interpretations of independence are contentious. Critics argue that while the Bank of England emphasizes independence, it may not effectively protect the economy from austerity measures that could potentially trigger a recession. Some central banks globally, like the European Central Bank and the Federal Reserve, have shown more flexibility regarding balance sheet management, suggesting a varied approach to monetary policy.
This distinction leads to a crucial question: Is the Bank fulfilling its fundamental role of ensuring financial stability by engaging in QT when it could induce hardship on the UK economy? This theme of questioned independence from fiscal constraints underscores a broader philosophical debate about the role of central banks in modern economies.