Bank of England governor to stay in role for extra year

Mark Carney to extend his term in office despite criticism from Brexit campaigners

Bank of England governor Mark Carney. Photograph: PA Wire

Bank of England governor Mark Carney. Photograph: PA Wire

 

Bank of England governor Mark Carney has pledged to extend his term in office by one year, defying pro-Brexit campaigners demanding his resignation.

Mr Carney said he would stay in the post until the end of June 2019, but has opted against serving a full eight-year term.

The move comes after British prime minister Theresa May said the Canadian banker was “absolutely” the right man for the job before her meeting with him on Monday at Downing Street.

Mr Carney said he had taken the decision because he recognised “the importance to the country of continuity during the UK’s Article 50 negotiations [to leave the EU]”.

British prime minister Theresa May had backed Mr Carney to extend his term on Monday, seeking to dampen political pressure on the central bank chief that had led to speculation he will leave the job in less than two years’ time.

Mr Carney had promised to announce by the end of the year whether he would stick to his scheduled departure date in mid-2018 - when Britain would likely be deep in the process of extricating itself from the EU - or to take up an option to stay until 2021.

Speculation had abounded about the future of the Canadian, the first foreigner to run the British central bank in its 322-year history, after Ms May took the unusual step of criticising the effects of low interest rates earlier this month.

Mr Carney has since faced criticism from some eurosceptic politicians in the ruling Conservative party, who accused him of compromising the bank’s independence through his warnings of the economic risks of the UK voting to leave the EU ahead of the June 23rd referendum,.

However, a spokeswoman for Ms May said on Monday that the prime minister was “clear in her support for the governor”.

Asked if he was the best man for the job, she said: “Absolutely.”

“It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years,” the spokeswoman added.

“The PM has always had a good working relationship with the governor of the Bank of England and intends to continue that.”

Meeting

Mr Carney met Ms May on Monday for what his office said was a regular meeting.

He is due to hold a quarterly Bank of England news conference on Thursday.

The career plans of a man once dubbed the “outstanding central banker of his generation” have gripped financial markets.

“Some of the recent slide in sterling and rise in government bond yields have been attributed by analysts to the prospect of Carney leaving the Bank of England.

“If Carney was to stay until 2021, that would somewhat reassure markets,” said Hetal Mehta, senior European economist with Legal and General Investment Management.

“It would be really unwelcome for [chancellor of the exchequer] Philip Hammond to have to find someone new over the course of next year, when he will have a million and one other things to worry about.”

Last week, Carney said his decision whether to stay would be based on personal rather than political considerations, and he would need to find some time to make up his mind.

Interest rates

Earlier this month, Ms May used a speech at her party’s annual conference to say low interest rates had had “some bad side-effects” on savers and the poor, prompting push-back from Mr Carney, who said he would not be told how to do his job by politicians.

Ms May’s office later said the comments weren’t directed at Mr Carney.

Following Ms May’s words, a string of senior politicians from her party have ramped up pressure on Mr Carney - saying he had made a series of policy missteps and “debased” the role of central bank governor by making political interventions in the EU referendum debate.

Before the referendum, Mr Carney and the Bank of England said Britain risked slower growth, higher inflation and even recession if voters backed leaving the EU, prompting criticism that the the central bank was biased and was itself destabilising markets.

“You don’t want somebody using being the governor of the Bank of England as a stepping stone to future career opportunities because it ought to be the absolute apex of anybody’s career,” said Conservative MP Jacob Rees-Mogg, a long-standing critic of Carney.

John Redwood, another leading eurosceptic politician, said the bank had been wrong to cut interest rates to a new record low in August and initiate several other stimulus measures as a response to the referendum result.

He also criticised Mr Carney and the bank for misleading markets by trying to flag up interest rate changes.

“You need a governor with judgment who studies the numbers carefully and says rather less than the Bank of England have been saying in the last year,” Mr Redwood said.

“Anything a bank says is of great interest and if you say too much, you make mistakes.”

PA and Reuters