A new nine-member bank monetary policy committee will control interest rates decisions, and the government will still set inflation targets which the bank would have to set its rates to meet, he said.
The changes are aimed to reassure markets that the Labour government will not take risks with the economy, the paper reports.
Former chancellor Kenneth Clarke condemned the move as hasty but his predecessor Norman Lamont supported it, saying it was overdue.
The Confederation of British Industry and Institute of Directors are quoted supporting the move. Statements from the new monetary policy committee will be examined for clues on policy shifts the papers says, and the bank's new roles is contrasted with the mechanisms used by other countries in setting rates and inflation targets.