Bailey: Populism Poses 'Serious Challenge' to Independent Central Banks
As Reform gathered in Birmingham, the Bank of England’s governor warned central banks cannot take their “legitimacy for granted”: populism “often rests on the claim that a particular political movement alone represents the authentic will of the people. Any institution seen to get in the way becomes an unrepresentative elite… This is a serious challenge.” Andrew Bailey argued independence since 1997 has delivered “the monetary and financial conditions that make sustained prosperity possible” — legitimacy resting “in the plurality of society, not in the preferences of any single group”.
Governors do not give speeches like this by accident, and the address doubles as a reply to the week’s specific provocations: Reform’s economy spokesman wants “greater diversity of thought” on the rate-setting committee and Mr Farage has mused about replacing Mr Bailey himself, while across the Atlantic the precedent of a president at war with his central bank plays out daily — Mr Bailey co-signed the bankers’ letter defending the Fed’s chair. His Hobbesian framing concedes the uncomfortable premise: independence is a political settlement, not a law of nature, and settlements survive only while their beneficiaries defend them. With three rate rises priced and mortgages repricing upward, the Bank is about to administer exactly the medicine populists campaign against. Watch the 17 September decision’s reception — it will test his thesis within the fortnight.