It is clear from the marked improvement in the performance of the UK economy over the last ten years, with regard to both inflation and steady growth, that the decision was wise and justified. The independence of a central bank is very important for its success in performing its functions and achieving its objectives.
This is because democratic governments have an “inflation bias,” for two main reasons: a. Since an expansionary interest rate policy, i.e., lowering the interest rate, tends to have a positive effect on GDP and only later does it contribute to higher inflation, and since democratic governments generally have a short horizon, they prefer to reduce interest rates, particularly when there are elections looming.