Car­ney’s risky “known un­known”

The Week Middle East - - City -

Alex Brum­mer

Daily Mail Mark Car­ney is nick­named the “un­re­li­able boyfriend” – and he lived up to it when he ap­peared be­fore a Lords select com­mit­tee, says Alex Brum­mer. Asked whether he planned to ex­tend his fiveyear term at the Bank of Eng­land, which ends in 2018, he wouldn’t com­mit. He may have good per­sonal rea­sons for that, but the fi­nan­cial mar­kets would have liked a bit more cer­tainty. Car­ney was care­ful not to take on his po­lit­i­cal crit­ics – Michael Gove and Wil­liam Hague are among those who have rub­bished the Bank’s poli­cies; he merely de­fended his pol­icy of quan­ti­ta­tive eas­ing, and warned that un­der­min­ing the Bank’s po­lit­i­cal in­de­pen­dence could in­crease risks. But the iden­tity of the gov­er­nor is tied up with that. Dur­ing the 2008 crunch, there were some in Down­ing Street who would have loved to ex­pel Mervyn King as gov­er­nor – but it would have been too much of a mar­ket risk. By al­low­ing spec­u­la­tion about the tim­ing of his de­par­ture – might he go in only two years? – Car­ney is cre­at­ing a “known un­known” that may be as bad for the pound and Govern­ment bonds as spec­u­la­tion on po­lit­i­cal in­ter­fer­ence would be.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.