Carney: Unreliable Boyfriend Commits to the Bank

Bank of England Governor Mark Carney has agreed to extend his time at the Bank. Economists are divided on whether he has been effective

David Brenchley 5 September, 2018 | 8:10AM
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Mark Carney has extended his tenure as Governor of the Bank of England

Mark Carney looks likely to remain as Governor of the Bank of England past his previously expected exit date in 2019, in order to “support a smooth Brexit”.

Carney told MPs on the Treasury Committee that he has agreed to extend his time at the Bank and expects an announcement to be made by Chancellor Philip Hammond “in due course”.

“I am willing to do whatever else I can in order to promote both a smooth Brexit and an effective transition at the Bank of England,” Carney said on Tuesday afternoon. “I emphasise the second point, as well, to make sure that transition process is done in an effective and orderly manner.”

Carney’s term had been due to end next June, having been brought forward by two years at the Canadian’s request shortly after the Brexit vote two years ago. The move had been speculated over last week, before being confirmed by Carney yesterday.

Some economists have approved of the idea, with Silvia Dall’Angelo, senior economist at Hermes Investment Management calling the outcome “ideal”. “It would provide continuity in the approach to monetary policy, shoring up business and consumer sentiment during the Brexit process and potentially allowing for a smoother transition,” she explained.

Anthony Gillham, head of investment at Quilter Investors, agrees that Carney sticking around through this transition period “does make sense”. “He will install a measure of certainty on monetary policy, which provides some air cover through what will surely be an unpredictable spell.”

Unreliable Boyfriend Commits

He has not been without controversy during his tenure. The forward guidance he abandoned earned him the moniker the “unreliable boyfriend” in the past, while some seem him as the face of ‘Project Fear’ thanks to his warnings over Brexit’s impact on the UK economy.

Despite that, Ben Brettell, senior economist at Hargreaves Lansdown, thinks “he’s done a decent job overall in extremely difficult circumstances” since taking over in 2013.

However, some don’t think it’s as important as it’s being made out. Will Hobbs, head of investment strategy at Barclays Smart Investor, says he’d be wary of placing too much emphasis on when Carney’s tenure ends. Central banks tend to be bureaucratic organisations with decision-making committees fuelled by reams of staffer research, Hobbs continues.

Instead, he prefers to look at the fundamentals of the UK economy, which currently show fragility. While he reckons in the long term the UK will prove “relatively resilient” to whichever form of Brexit it ends up with, he’s becoming more worried now.

That’s because of a marked deterioration in the private sector balance, a measure of how consumers and businesses are funding their expenditure; and one of his five preferred recession indicators. This “points to an increasingly frail UK economy, perhaps more vulnerable to disorderly Brexit”.

Looking forward, Carney has plotted a steady path for interest rate rises, the last of which came in August. Currently the rate stands at 0.75%, and Brettell sees that figure staying “lower for longer than most people expect”.

He also expects a much lower peak than a typical interest rate cycle, adding: “I’d be surprised if they got higher than 1.5-2% before it became necessary to start loosening policy again.”

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David Brenchley

David Brenchley  is a Reporter for

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