At noon today, the Monetary Policy Committee of the Bank of England will deliver its interest rate decision for November. The base cost of borrowing will probably remain unchanged at 5.75 per cent although a cut of 0.25 per cent is justified and would be preferable. As usual, the decision will be scrutinised closely: but as the dust, hopefully, begins to settle on the Northern Rock debacle there is much more at stake than just the short-term cost of borrowing.

Events of the past two months have cast doubt on the Bank's independence from the Government. It is Gordon Brown, of course, who granted the Bank independence in his first substantial act on becoming Chancellor of the Exchequer in 1997. In the intervening ten years he has reminded voters ceaselessly about the wisdom of the move and the stability of the economic success that it has fostered. Yet as the Bank and the new Labour Government encountered their first challenging financial test, the Old Lady of Threadneedle Street has looked uneasy with her new political masters.

The sense of entanglement is heightened by the confusing arrangement that divides responsibility for maintaining orderly financial markets among the Government, the Bank and the Financial Services Authority. The tripartite mechanism is such a muddle that it is becoming increasing difficult to separate the Bank's regulatory role - which has left much to be desired — and record for macroeconomic management which, thus far, has allowed Mervyn King, the Governor of the Bank, to enjoy a sound reputation as an inflation tamer.

Mr King certainly bears some responsibility for the mess. It was unwise of him to theorise about the role of a central banker as lender of last resort just as Northern Rock was crumbling around his ears. It was more misguided for Mr King to allow himself to be drawn by a clever journalist into a self-justifying blame game. Mr King's words were carefully chosen, but not chosen carefully enough to leave anyone in any doubt about his view that the Chancellor should carry the can for blocking the sale of Northern Rock to Lloyds TSB.

For its part, no useful purpose is served by Government wilfully undermining the Governor of the Bank of England through an audible whispering campaign. Quite apart from tacitly positioning Mr King as a subordinate without an independent leg to stand on, it damages the credibility of the Bank as an institution. If the economists of Threadneedle Street are to command the respect of the markets, they cannot be used as political playthings or be used and abused for the advantage of Downing Street.

The Bank never has been as independent as many assume, nor as independent as Mr Brown, when it suited him, allowed people to believe. Since Government controls seven of the nine appointments to the Monetary Policy Committee, and can also hire and fire the Governor and his two deputies, it retains enormous influence. The Bank is also required to justify itself to Parliament, through appearances at select committees, and by writing open letters if it fails to meet inflation targets. Indeed, the rubric outlining the Bank's status clearly states that it has nothing more absolute than “operational” independence. But the self-sufficiency of the Bank must be protected and its reputation bolstered. Financial markets are shaky enough without having a shaky central bank.