Truss: ‘a reckoning is coming’ for central banks
Former UK prime minister Liz Truss is backing Donald Trump in his fight with the Federal Reserve.
Truss has told Bloomberg’s Odd Lots podcast that it is wrong that unelected central bankers can undermine (as she sees it) elected politicians.
Truss, who was briefly prime minister in September and October 2022, said:
“I think the Bank of England needs to be accountable to politicians. I think the current system doesn’t work. This is why I’m very sympathetic to what Donald Trump is saying about the Fed.”
In the interview, Truss explains that people who owned assets and capital had done very well from the easy money created by the Bank of England (BoE) since the financial crisis, while that loose policy also made it hard for young people to buy homes.
Given the importance of monetary policy of setting the allocation of assets within society, she argues that it’s wrong that people who make those decisions aren’t accountable to the electorate.
She says:
“It’s also very difficult, as I found as prime minister, to combine fiscal and monetary policy if you don’t hold one of the levers. So, I think it’s got to change.
I think there is a reckoning coming for the central banks, not just in Britain but also in the United States, also the ECB.
The current system does not work.
Truss, who lost power after her mini-budget spooked the financial markets, crashing the pound and driving up borrowing costs, also claimed the BoE had “sabotaged” what she tried to do because she had been a critic of central banks, and wanted the Treasury to have a larger role setting the Bank’s mandate.
“They didn’t like their power being challenged.”
Truss has previously blamed the Bank of England for failing to anticipate the market consequences of her budget. Governor Andrew Bailey has rejected that criticism, pointing out that the Bank used its intervention tools to stabilise the bond market and protect pension funds.
In her Bloomberg interview, Truss argues that democratically elected leaders shouldn’t “cowtow”, criticises the “failing economic orthodoxy” and warns that Britain is heading for a “very, very serious crisis.”
Truss, who lost her parliamentary seat in last year’s general election, says the UK now faces an “economic doom loop of higher taxes, lower growth, higher debt, and it’s very difficult now to see the political way out of that.”
Key events
Nvidia shares dip after earnings report
Stocks have opened calmly on Wall Street, despite some disappointment with Nvidia after its financial results last night.
The S&P 500 share index has dipped by just one points, or 0.026%, in early trading while the tech-focused Nasdaq index is 0.2% higher.
Nvidia’s shares have dropped by around 2% in early trading, after it missed forecasts for data center revenue but also beat expectations for adjusted earnings per share.
Overall, revenues were up 56% compared with a year ago, which might calm concerns that the AI boom was fading.
Kathleen Brooks, research director at XTB, reports that there is disappointment that Nvidia didn’t report any sales of its H20 chip to China last quarter, even though China export restrictions were eased.
Brooks adds:
Ultimately, the market does not know how big the China market is for Nvidia, or the impact of the Chinese government encouraging a move away from Nvidia’s chips, especially for government systems.
Thus, this earnings report does not give us too much information on future sales growth to China, and it also fails to deliver what analysts want to know: the potential sales growth for Nvidia’s chip that has been designed specifically for the Chinese market.
The upward revision to US growth in April-June was partly due to the hi-tech investment boom as companies race to build artificial intelligence data systems.
Capital Economics explain:
That revision was partly a consumption story – with consumer spending now estimated to have rebounded to 1.6% in the second quarter from 0.5% in the first. Even more encouraging, however, is the increasingly concrete signs of an AI-related boom in tech investment. Investment in computer hardware increased by 61.2% annualised, slightly more than in the initial estimate.
But the big revision came in software investment, which is now estimated to have expanded at a 26.4% annualised pace – the biggest quarterly gain since at least 2007.
Just in: Federal Reserve Governor Lisa Cook filed a lawsuit challenging President Donald Trump’s attempt to fire her over claims she lied on mortgage applications, Bloomberg reports.
The move, which was expected, kicks off a historic fight over independence of the US central bank.
Cook filed the suit Thursday in federal court in Washington, according to court records.
Donald Trump announced he was firing Cook on Monday night, over unconfirmed allegations of mortgage fraud.
US GDP revised higher
Over in the US, economic growth last spring was stronger than first estimated.
The latest assessment of US GDP, just released, shows the economy expanded at an annualised rate of 3.3% in April-June, up from the initial estimate of 3% growth.
That confirms that the world’s largest economy returned to growth after shrinking by 0.5%/year in January-March, when a surge of imports dragged down GDP.
MACRO: 🇺🇸 US GDP for Q2 was revised upwards with inflation revised down.
‣ Q2 GDP 3.3% vs 3.0% Initial
‣ PCE Price Index 2.0% vs 2.1% Initial pic.twitter.com/2Va81Qatfz— LuxAlgo (@LuxAlgo) August 28, 2025
The US Bureau of Economic Analysis reports that the upturn in real GDP in the second quarter primarily reflected a downturn in imports and an acceleration in consumer spending that were partly offset by a downturn in investment.
Today’s revision is due to the BEA lifting its estimate for investment and consumer spending in the last quarter, though this was partly offset by a downward revision to government spending and an upward revision to imports.
Sportscar manufacturer Lotus to cut 550 jobs
Back in the UK car industry, Lotus has said it plans to cut 550 jobs in Britain.
The job cuts will affect almost half the 1,300 staff at the company’s UK headquarters in Hethel, Norfolk.
Lotus put some of the blame on Donald Trump’s trade war, saying:
“We believe this is necessary in order to secure a sustainable future for the company in today’s rapidly evolving automotive environment, which is seeing uncertainty with rapid changes in global policies including tariffs.
“The brand remains fully committed to the UK, and Norfolk will remain the home of the Lotus’ sports car, motorsports and engineering consulting operations.
“It is actively exploring future growth opportunities to diversify Lotus Cars’ business model, including through third-party manufacturing.”
Back in June, there were reports that Lotus was planning to end production of its sportscars in the UK. But after holding meetings with the government, Chinese owner Geely insisted it had no intention of shutting its Norfolk factory
Crown Prosecution Service brings charges related to provision of gambling services in Turkey
Eleven people, including former directors of Entain, the gambling company that owns Ladbrokes and Coral, have been charged with offences including bribery, fraud, cheating the public revenue, tax evasion and perverting the course of justice.
The Crown Prosecution Service said this morning that it had authorised the prosecution of 11 individuals for seven offences, in relation to the provision of gambling services in Turkey between 2011 and 2018.
Those charged include Kenny Alexander, the former chief executive of Entain, its former chairman, Lee Feldman, former legal director Robert Hoskin, and James Humberstone, who held several roles with the company.
Ten of the individuals were charged with offences allegedly committed between 2011 and 2018, while one person was charged for an offence relating to the investigation by HMRC.
Richard Las, director of HMRC’s Fraud Investigation Service, said:
“This has been a complex and international investigation. These are serious charges that relate to conspiracy to defraud, bribery, cheating the public revenue, evasion of income tax and perverting the course of justice among others.
“We remind everyone that proceedings are now active and we won’t be adding anything further.”
These are difficult times at the Treasury, as speculation swirls that the UK could be in a race with France to agree an IMF bailout.
But there is something for Number 11 to celebrate, though. Neil Amin-Smith, special advisor to chancellor Rachel Reeves, has topped a list of the 100 sexiest Londoners.
Before becoming a top SPAD, Amin-Smith (Westminster School, Cambridge) was known for his role in music group Clean Bandit.
This isn’t really our area, so we’ll defer to the Evening Standard, which reports:
Spotted tie-less by the Chancellor’s side, he turns Treasury heads like hungry owls. With broad shoulders, tousled chocolate hair, statement earrings, and a smile that could melt decades of geopolitical tension, it’s no wonder Reeves keeps Amin-Smith close (how she manages to cry at work with him on her team is unbeknownst to us).
The full list is here. It’s light on other names from the the world of business and finance, apart from banker Frederick Windsor and Phillips principal auctioneer Henry Highley.
The financial markets aren’t convinced that the Bank of England will be able to cut interest rate again this year.
After five quarter-point cuts since last summer, the Bank may struggle to agree a sixth until 2026.
Shane O’Neill, head of interest rates at Validus Risk Management, explains:
As this clip shows, Liz Truss fears the UK is further down the “negative spiral” created by slow growth and the shortfall between tax revenues and spending:
The UK is still stuck in the economic “doom loop” that prompted the 2022 mini-budget, former UK Prime Minister Liz Truss said.
On Odd Lots, Truss told @tracyalloway and @TheStalwart about the problems she sees facing the UK – and where the Bank of England fits into them… pic.twitter.com/1vMpp449xm
— Bloomberg (@business) August 28, 2025
Liz Truss also told Bloomberg that she is even more convinced that the UK is at risk of a 1970s-style economic crisis than a year ago, when she warned of the risk of a bailout.
Today, though, the bond market is calm.
UK government borrowing costs are unchanged today, with the yield (or interest rate) on 30-year British debt pretty-much flat at 5.594%.
Earlier this week it hit 5.63%, close to the 27-year high (5.663%) reached in April.
I talk to @bloomberg about how unaccountable central banks have failed and done huge damage to our economies.@realDonaldTrump is right to take on the Federal Reserve.
And Britain is headed for a very serious economic crisis where there will be a reckoning for @bankofengland.…
— Liz Truss (@trussliz) August 28, 2025
Professor: Truss commments are troubling
Professor Costas Milas, of the Management School at the University of Liverpool, is very troubled by Liz truss’s comments about central banks and the conduct of monetary policy.
Prof Milas tells us:
Clearly, Trump wants to take full control of US monetary policy and is not shy of saying so. Is it the case of Liz Truss advocating a similar scenario for the UK?
More worryingly, Liz Truss needs to explain how to go about that. In the US, Trump is forcing Fed Governor Lisa Cook out of the Fed with a series of unproved (so far) accusations, at the same time while giving a “signal” that he will follow similar tactics with the remaining Fed Governors.
Is former PM Liz Truss advocating a similar strategy to be pursued by Sir Keir Starmer, or something else in order to bring monetary policy back in the hands of the UK government?
Zero farmers would vote Labour again after inheritance tax row, poll finds
Helena Horton
Keir Starmer enjoyed a boost from the rural community during the 2024 general election after he and environment secretary Steve Reed went on tour of the farming conferences and other countryside events to assure those in attendance that they understood their struggles.
But now, that support has evaporated, according to farmers polled by the Country Land and Business Association (CLA).
This is due to fury over the inheritance tax on agricultural assets brought in at last year’s budget, which is projected to put some farms out of business when they are passed on.
A survey of 490 farmers and landowners by the rural business group puts Reform UK (36%) just behind the Conservatives (38%) in farmer support, with Labour attracting 0%.
“The Treasury says these reforms will barely touch rural Britain,” CLA president Victoria Vyvyan said, adding:
“Our polling shows they will force hard choices on farms that have sustained communities for generations – selling land, laying off workers, shelving future plans.
“Rural Labour MPs can see what’s coming. They know it will drain the life from the countryside and strip away the trust of the people who sent them to Westminster.
“If they support it, their voters won’t forget.”
Supporters of central bank independence argue that it has played an important role in recent decades in subduing inflation, and persuading investors that governments wouldn’t inflate their debts away.
Finland’s central bank chief Olli Rehn (who we heard from earlier) has made this point this morning.
Rehn told a panel discussion on democracy held in Turku, Finland:
“If the central bank’s independence were truly to crumble, and the U.S. Federal Reserve began making decisions on grounds other than sound monetary policy principles — for example, because the president demands lower interest rates — the inevitable consequence would be inflation picking up.”
ECB’S REHN:
IF FED’S INDEPENDENCE WERE TO CRUMBLE, INFLATION WOULD INEVITABLY PICK UP
— PiQ (@PiQSuite) August 28, 2025
Liz Truss’s comments show how Trump’s efforts to roll back the decades-old consensus on the value of independent monetary policy has “an eager audience in some of the world’s largest economies”, point out Bloomberg.
They add:
In the UK, officials for the populist Reform UK, which has led public opinion polls for months, have suggested they might be willing to rein in some of the BOE’s powers. And Reform’s leader, Nigel Farage — a long-time Trump supporter — has privately discussed the possibility of taking back independence from the central bank, Bloomberg reported in June, citing people familiar with the discussions.
How have you been affected by the rise in food prices?
With UK food inflation now hitting 4.2%, we would like to hear from people on how they feel about food inflation and if it’s affected their shopping habits….
Truss: ‘a reckoning is coming’ for central banks
Former UK prime minister Liz Truss is backing Donald Trump in his fight with the Federal Reserve.
Truss has told Bloomberg’s Odd Lots podcast that it is wrong that unelected central bankers can undermine (as she sees it) elected politicians.
Truss, who was briefly prime minister in September and October 2022, said:
“I think the Bank of England needs to be accountable to politicians. I think the current system doesn’t work. This is why I’m very sympathetic to what Donald Trump is saying about the Fed.”
In the interview, Truss explains that people who owned assets and capital had done very well from the easy money created by the Bank of England (BoE) since the financial crisis, while that loose policy also made it hard for young people to buy homes.
Given the importance of monetary policy of setting the allocation of assets within society, she argues that it’s wrong that people who make those decisions aren’t accountable to the electorate.
She says:
“It’s also very difficult, as I found as prime minister, to combine fiscal and monetary policy if you don’t hold one of the levers. So, I think it’s got to change.
I think there is a reckoning coming for the central banks, not just in Britain but also in the United States, also the ECB.
The current system does not work.
Truss, who lost power after her mini-budget spooked the financial markets, crashing the pound and driving up borrowing costs, also claimed the BoE had “sabotaged” what she tried to do because she had been a critic of central banks, and wanted the Treasury to have a larger role setting the Bank’s mandate.
“They didn’t like their power being challenged.”
Truss has previously blamed the Bank of England for failing to anticipate the market consequences of her budget. Governor Andrew Bailey has rejected that criticism, pointing out that the Bank used its intervention tools to stabilise the bond market and protect pension funds.
In her Bloomberg interview, Truss argues that democratically elected leaders shouldn’t “cowtow”, criticises the “failing economic orthodoxy” and warns that Britain is heading for a “very, very serious crisis.”
Truss, who lost her parliamentary seat in last year’s general election, says the UK now faces an “economic doom loop of higher taxes, lower growth, higher debt, and it’s very difficult now to see the political way out of that.”
Trump’s challenge to Fed independence holds global risk, Finland’s Rehn warns
Finland’s central bank chief has warned that President Donald Trump’s attacks on the US. Federal Reserve have a significant impact on the financial markets and the world economy.
Olli Rehn warned in a speech this morning that the Fed’s independence has remained an inviolable principle since the 1980s, but was now under attack, Reuters reports.
Rehn explained:
“Now, however, this principle is wobbling badly. This could have substantial, global knock-on effects on both the financial markets and the real economy.”
Rehn’s comments follow Donald Trump’s attempt to fire Federal Reserve governor Lisa Cook over unconfirmed allegations of mortgage fraud; Cook is refusing to step down, and pledging to sue the Trump administration.
Trump has also repeatedly criticised the Fed, and its chair Jerome Powell, for not cutting US interest rates.
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