WASHINGTON, Oct 7 (Reuters) - British finance minister Philip Hammond sought to quash speculation that the government wanted to influence the Bank of England after the country’s prime minister highlighted the “bad side effects” of its record low interest rates this week.
Hammond said the BoE remained independent and the government had no plans to change its mandate.
“The government does not... plan to change the remit of the Band of England,” he told reporters in Washington where he was attending meetings of finance chiefs from around the world at the International Monetary Fund.
British Prime Minister Theresa May took the unusual step of commenting on central bank policy on Wednesday when she said near-zero rates and the BoE’s huge bond-buying programme had hurt savers.
“The PM was commenting on the impact of monetary policy... essentially setting out a fact,” Hammond said on Friday.
He also said he might wait until March before announcing his new deficit reduction plan.
May and Hammond have already dropped the plan of former finance minister George Osborne to turn Britain’s budget deficit into a surplus by 2020 although they have said they do intend to get the public finances back into the black at some point.
Hammond did not comment on an overnight ‘flash crash’ in sterling but said its decline earlier this week was due to markets taking on board that Britain’s government definitely intended to take the country out of the European Union.
“Perhaps what happened this week is the final shoe dropped,” he said, adding that the market reaction was “part of a pattern of turbulence I would expect to see”.
Hammond said the government had no plans to start the sale of shares in state-owned Royal Bank of Scotland because of an investigation by the U.S. Department of Justice into the alleged misselling of U.S. mortgage-backed securities and delays in the sale of unit Williams & Glyn.
Also, market conditions were not right for the sale, he said.
Earlier on Friday, Britain’s government said it will resume selling its residual 3.6 billion pound ($4.5 billion) stake in Lloyds Banking Group, which it has held since bailing out Lloyds and RBS during the financial crisis. (Writing by William Schomberg; editing by David Milliken)