The Bank of England (BoE) has become “addicted” to its nearly 900 billion-pound bond-buying programme and must spell out plans to wean itself off it, the House of Lords Economic Affairs Committee has warned.

report by the committee calls on the Bank of England to become more transparent over its use of quantitative easing (QE), as it warns the programme may be sending inflation spiralling and become a “serious danger” to public finances.

The report also warned the Bank of England’s independence is being called into question as its money-printing programme is increasingly being viewed as a tool to finance the Government’s coronavirus spending.

Michael Forsyth, the committee chairman, said the programme – equivalent to about 40 per cent of British annual economic output – required the sort of “significant scrutiny” the Bank had not faced up until now.

“Going forwards, the Bank must be more transparent, justify the use of QE and show it’s working. The Bank needs to explain how it will curb inflation if it is more than just short term. It also needs to do more to mitigate widening wealth inequalities that have resulted from rising asset prices caused by QE.”

In a statement, the Bank of England said the pandemic had posed an unprecedented threat, and that QE measures had “lowered borrowing costs right across the economy, providing much needed support to all borrowers at a time of extreme economic stress”.

“It is wrong to suggest that the MPC has pursued another policy, namely to finance the government’s borrowing during the crisis. The evidence does not support this assertion.”