Philip Hammond insists Bank of England's independence is safe

The move comes following Theresa May’s comments at the Tory party conference that ‘a change has got to come’ to low interest rates

The Chancellor said the Bank's Monetary Policy Committee will continue to make decisions on interest rates (Getty)

The Chancellor Philip Hammond has sought to quash the suggestion the Government is seeking to encroach on the independence of the Bank of England.

“There will be no change in monetary policy … Monetary policy is independently determined, that will continue to be the case,” Mr Hammond told the Treasury Select Committee.

“The Monetary Policy Committee will continue to make decisions on interest rates and recommendations on unconventional monetary policy.”

Mr Hammond was being questioned by the committee’s chair, Andrew Tyrie, on the comments of Theresa May at the Conservative Party conference, where the Prime Minister claimed low interest rates and money printing by the Bank of England since the 2008 financial crisis had made the rich richer and added “a change has got to come”.

The Prime Minister’s spokesman sought to downplay the comments after the speech, but the Bank has been repeatedly asked about the issue in the weeks since.

The Bank’s Governor, Mark Carney, said in Birmingham last week that he would not “take instruction” from politicians.

“Politicians have done a very good job of setting up the system. Where it can be difficult sometimes is if there are political comments on our policies as opposed to political comments on our objectives.”

“The objectives are what are set by the politicians. The policies are done by technocrats. We are not going to take instruction on our policies from the political side.”

The temperature was turned up again on Monday when the former Conservative Party leader and foreign secretary William Hague wrote a column in The Daily Telegraph in which he attacked central banks for “losing the plot” and urged them to raise interest rates.

Asked about this intervention, Mr Hammond said: “I'd hardly describe him [William Hague] as a close friend – I've hardly had any contact with him since he left the Commons.”

He added: "There are no proposals to change that regime."

Mr Hammond suggested that fiscal policy might be used to offset the impact of the Bank's money printing.

“We have other tools that can address the distributional effects of monetary policy, whether across the income scale or across the generations,” he said.

"The government’s job is to address any undesirable consequences of the monetary policy that are allocated to the Monetary Policy Committee.”

Mr Hammond also defended the Bank's policies of recent years, pointing out that “there will be lots of people who don't own assets but who have a job that they wouldn't otherwise have”.