GREEN LIGHT FOR CARNEY
Welcome to stay, U.K. says
U.K. Chancellor of the Exchequer Philip Hammond gave his backing to Mark Carney and said he’d welcome a decision by the Canadian to remain in his role as Bank of England governor.
The governor has fewer than 90 days before a self-imposed year-end deadline to say whether he wants to serve a full eight-year term through 2021, or leave in 2018 as originally planned. Carney has drawn criticism from some lawmakers for his handling of the U.K.’s decision to leave the European Union, but Hammond said the BoE’s actions helped smooth the economy’s progress after the June vote.
“The governor’s doing a good job,” Hammond said in a Bloomberg Television interview. “He will make his decision in due course, and that’s his decision — he made that very clear — but I certainly would welcome his decision to stay if that is the decision he makes.”
Hammond’s comments come as the political view of central bank policies that drive interest rates lower has sounded increasingly critical. Prime Minister Theresa May said Wednesday that ultraloose monetary policy had some “bad side-effects” and increased inequality.
Carney, who was appointed by Hammond’s predecessor George Osborne, oversaw the BoE’s first interest-rate cut in seven years in August alongside a package of asset purchases, aimed at tackling any economic fallout from the vote. While the economy has so far shown some resilience to the Brexit vote, some policy-makers say the effect could be drawn out over time.
“He is in a very tough position in terms of how he is trying to deal with this situation,” Scott Thiel, deputy chief investment officer of global fundamental fixed income at BlackRock, said at a media briefing in London. “I don’t envy him. The question for Mr. Carney, which is a very difficult one, is does he react to what he sees or does he react to something more forward.”
Hammond had only praise for policy-makers, he told Bloomberg.
“The Bank of England is executing its remit as an independent central bank and the monetary policy committee is the arbiter on monetary policy decisions — in my view, very effectively,” he said. “They helped us recover from the financial crisis, and they have helped us to smooth the response to this shock that occurred on June 23.”