ernie – you seem to have missed the point that taking interest rate decisions out of the chancellor's hands and into the hands of the Bank of England was precisely so that the BoE would keep inflation low, rather than politicians being tempted to reduce interest rates to fuel an inflationary boom in the run up to an election.
http://en.wikipedia.org/wiki/Bank_of_England
On 6 May 1997, following the 1997 general election which brought another Labour government to power, it was announced by the Chancellor of the Exchequer, Gordon Brown, that the Bank of England would be granted operational independence over monetary policy. Under the terms of the Bank of England Act 1998 (which came into force on 1 June 1998), the bank's Monetary Policy Committee was given sole responsibility for setting interest rates to meet the Government's stated Retail Prices Index (RPI) inflation target of 2.5%.[8] The target has now changed to 2% since the Consumer Price Index (CPI) replaced the Retail Prices Index as the treasury's inflation index.[9] If inflation overshoots or undershoots the target by more than 1%, the Governor has to write a letter to the Chancellor of the Exchequer explaining why, and how he will remedy the situation.
The handing over of monetary policy to the Bank of England had featured as a key plank of the Liberal Democrats' economic policy since the 1992 general election.[10] A Conservative MP Nicholas Budgen had also proposed this as a Private Member's Bill in 1996, but the bill failed as it had neither the support of the government nor that of the opposition.
Of course, not including house prices in the inflation measure used, and exporting our manufacturing to China, allowed the most recent boom to go under the radar.