The Bank of England became operationally independent in 1997.
On 6 May 1997, Chancellor Gordon Brown announced that the Bank would receive responsibility for setting UK interest rates. The reform gave the Bank “instrument” or operational independence: it could choose the monetary-policy tools and interest-rate level needed to meet an inflation target.
The change created the Monetary Policy Committee, which first met in June 1997. Its membership combined the Governor, Bank officials and externally appointed economists, with each member voting on interest-rate decisions. The arrangement was later placed on a statutory footing through the Bank of England Act 1998.
A common mix-up is to answer 1998 because that was the year the legislation took effect. However, the operational transfer of monetary-policy responsibility was announced and implemented in practice in 1997. The government still sets the inflation target, so the Bank’s independence concerns how it pursues that target, not complete independence from elected government.