Savers could revolt over low interest rates, says William Hague

The former foreign secretary William Hague has warned the Bank of England that public anger about the impact on savers of low interest rates is rising and could lead to a revolt that threatens its independence.

He said savers were finding it “impossible to earn a worthwhile return” while pension funds were being crushed by the collapse in interest they earn on investments.

Low interest rates and the Bank’s £435bn stimulus programme were also increasing inequality by pushing up property and stock market prices.

Writing in the Daily Telegraph, Lord Hague said: “Eight years after the global financial crisis they are still pursuing emergency policies that are becoming steadily more unpopular and counterproductive. Unless they change course soon, they will find their independence increasingly under attack.”

The scathing assault on the Bank’s low interest rate policy since the 2008 crash echoes the prime minister’s criticisms at the Tory party conference, when she said the Bank’s actions were hurting “ordinary” people. May said it was the rich who benefited from the Bank printing money and cutting interest rates, while “ordinary, working class people” were asked to make sacrifices in terms of stagnating pay, job insecurity and unaffordable housing.

Donald Trump, the US presidential candidate, has repeatedly attacked the US central bank chief, Janet Yellen, for punishing savers by keeping interest rates low.

Last week, the Bank of England governor Mark Carney said Threadneedle Street would not take instructions on its policies from politicians.

Carney, who is considering whether to extend his term of office beyond 2018, said it became difficult for the Bank when politicians commented on its policies rather than its objectives. He said politicians had done a “good job” of setting up the system in which the Bank operates, but added: “We are not going to take instruction on our policies from the political side.”

Hague listed 10 reasons the Bank’s low interest rates were harmful and needed to be reversed quickly. He said the US Federal Reserve was best placed to boost interest rates back towards pre-crash levels of 4% after years of consistent growth.

“The only way out is for the US Fed to summon the courage to lead the way to higher interest rates, and others to follow slowly but surely,” he said. “If they fail to do so, the era of their much-vaunted independence will come, possibly quite dramatically, to its end.”