Mark Carney Under Pressure
The governor of the Bank of England (BoE), Mark Carney, is under pressure to decide whether to stay or not at the Bank. There are many speculations about his decision. But the markets will have to wait until Thursday when the Bank is presenting its quarterly inflation report and Carney will be giving a press conference at 12.30pm, announcing his decision.
The Reuters Breaking Views team says that if Carney stays it will show that the British government “values independent monetary policy” but if he decides to leave in 2018, “the decision would spook foreign investors and embolden the bank’s domestic critics.”
Carney’s future is related to the future of the BoE itself, if it’s going to remain an autonomous and non-political institution.
Who is Mark Carney?
A Canadian economist and Chairman of the G20’s Financial Stability Board, Carney worked for Goldman Sachs, served as a senior associate deputy minister at the Canadian Department of Finance, as deputy governor and governor of the Bank of Canada, before he joined the BoE in the position of governor in 2013. Chancellor George Osborne, who announced his appointment to the BoE back in 2012, called Carney “the outstanding central banker of his generation.” He was mostly praised for his role in helping Canada survive the financial crisis after 2007.
Mark Carney’s Critics
Carney has been accused by Brexit campaigners of taking a pro-remain stance in the British Referendum when he warned of the risks to the economy. However, he has argued that it’s his duty to speak of the dangers for the UK economy after Brexit.
Speaking at the House of Lords committee, before the Referendum vote, he said: "Assessing and reporting major risks does not mean becoming involved in politics; rather it would be political to suppress important judgments.” For Carney, Brexit is one of the biggest risks to the UK's financial stability.
With the Leave vote winning, he was expected by many Brexiteers to resign. In particular, this was justified after Theresa May’s first speech as a PM. At the Tory conference, she hinted at the BoE’s monetary policy as being ineffective by keeping interest rates low.
Calling him a “rockstar” and asking him to “behave”, Dan Hannan, but also other Brexiteers attacked Carney, for his alleged anti-Brexit attitude. Another Brexiteer and failed Tory leadership candidate, Michael Gove, had commented on Carney’s supposed “arrogance” and assertion that he won’t be taking instructions on the Bank’s policies from politicians. But Carney and the BoE are independent and have the freedom to set monetary policy. His warnings back in May, that a Brexit vote would drive the country to a recession, weren’t backing Project Fear as the Brexiteers argued, but they were an independent and objective forecast.
BoE and Economic Stability
Many economists have come to Carney’s defense. Economist Vicky Pryce, of the Centre for Economics and Business Research, talking on the Today programme, said: “Mark Carney was absolutely right to be prepared to do something about Brexit. The economy wouldn’t be growing anything like as fast as it is if it wasn’t for his very immediate intervention in the markets.”
At the moment, the hopeful speculations of Carney staying and extending his term until 2021 are helping the pound from further plummeting. Even Theresa May is now saying Carney is the best man for the job. A spokeswoman of the PM has told Westminster reporters on Monday (31 Oct.) that “The PM has been clear in her support for the governor, the work he is doing for the country. It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years.”
In the spirit of Halloween—it is 31st October today—the hope of Carney staying might also function as garlic to keep the vampire Brexiteers from further spreading the demands for his resignation.