Independence day: why Gordon Brown gave the Bank the right to set interest rates

The Bank of England chair, Eddie George, and then chancellor, Gordon Brown, whose plan it was to give Threadneedle Street the right to set interest rates. Photograph: Matthew Fearn/PA

Gordon Brown had a surprise in store for Eddie George when he summoned the then governor of the Bank of England to a meeting at 11 Downing Street on bank holiday Monday, 25 years ago this week.

For the past two years, Labour’s new chancellor had been working on a plan to give Threadneedle Street the right to set interest rates and now he was ready to tell George about it. Secrecy was complete. The first the City heard of the idea that henceforth it would be the Bank’s job to hit the government’s inflation target, was when it was announced 24 hours later.