Four years ago this month, Mark Carney decided to swap his role at Canada’s central bank for that of Governor of the Bank of England, saying that he was “going to where the challenges are greatest.”
The task at hand for the incoming Bank of England governor was to re-ignite a sluggish economic recovery with interest rates almost at zero. According to Bloomberg, the challenges he faces are even greater now that Britain is preparing for Brexit.
As the markets look on, the pound is falling with a hint of stagflation in the air, even though the economy is performing better than the BOE predicted. Furthermore, banks are threatening to slash jobs in the City of London.
This is a role that requires total attention, devotion and I intend to give it for as long as I can.
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Carney meanwhile has been attacked by some politicians who have accused him of bias over Brexit and of misreading the danger to the post-referendum economy.
Amid the current situation, Carney has to soon decide if he’s up for facing these bigger challenges and extend his term to 2021 or whether he will move on as originally planned in 2018, when Brexit negotiations will be fully underway.
Carney has commented that the choice will ultimately be down to personal rather than the political reasons. He said: “Like everyone, I have personal circumstances which I have to manage…this is a role that requires total attention, devotion and I intend to give it for as long as I can.”
In the meantime he must keep setting monetary policy. Economists recently surveyed by Bloomberg predicted a November rate cut. After the economy grew 0.5 percent in the third quarter and Carney noted limits to officials’ willingness to ignore accelerating inflation, they now see no change .
Carney does, however, have his supporters. Simon Derrick, a strategist at BNY Mellon, said: “Mark Carney has done an exemplary job since June 23. Irrespective of why he might leave, losing him would add yet more uncertainty at exactly the wrong point.”
As Carney mulls over his future, central bank policy may mean UK gilts remain the world’s worst performing sovereign-debt market of the past three months.