In recent weeks, Nigel Farage has sharpened criticism of the Bank of England. His challenge to central bank independence isn’t just opposition rhetoric but signals potential future policy, Rabobank's Senior Macro Strategist Stefan Koopman reports.

UK central bank independence under scrutiny

"The UK’s flexible institutional architecture enables swift and meaningful changes to its monetary regime. The bond market is the natural source of pushback. Markets may price this risk early if Reform UK’s polling leads persist and/or if central bank reform enters the party’s manifesto."

"That could be reflected in steeper gilt curves with higher risk premiums, an FX uncertainty discount, and underperformance in rate-sensitive equities. If credibility in the UK’s institutions erodes, even modest reforms can trigger outsized market reactions."