Staff Working Paper No. 1,110
By Michael Salib and Mesha Ghazaleh
The Bank’s monetary policy objectives are among the most significant statutory objectives bestowed by Parliament on any UK public authority. The objectives make the Bank responsible for maintaining price stability and, subject to that, for supporting the government’s economic policy, including its objectives for growth and employment. When granted in 1998, the objectives were a watershed moment in the three centuries‑old history of an institution that had long‑resisted having its role prescribed or, as Bank officials at the time saw it, constrained by, law. Yet the Bank quickly embraced the benefits of having greater clarity in its legal mandate, and the objectives have proved remarkably resilient in directing the Bank’s monetary response over the past 25 years. This paper offers an in‑depth historical and legal account of the Bank’s statutory monetary policy objectives; it explores the relevant statutory provisions in the Bank of England Act 1998 and the debates that surrounded their drafting, as well as their application and interpretation in practice.
The Bank of England’s statutory monetary policy objectives: a historical and legal account
