Mark Carney finally takes the BoE hot seat

The much-vaunted introduction of Canadian Mark Carney to the machinery of the British financial system comes to a head today, as the first foreign Bank of England governor kicks off his first day.

by Michael Northcott
Last Updated: 06 Sep 2013

He may be notoriously unflashy, but perhaps few expected him to apply it to his journey to work – the newly appointed governor of the Bank of England took the tube to work this morning, with all the other sweaty commuters. Something tells us Mark Carney is going to bring something different to Threadneedle Street. 

But the question on everyone’s lips is whether he can ‘fix’ the economy during his five-year term. His principal challenges will be the same as his predecessors: interest rates, inflation and growth. Bear in mind that the low interest rates have essentially amounted to a windfall for banks (whose own rates are higher than the BoE’s, so they can pocket the difference), and Carney will need to tread carefully with them, too.

How he strikes the balance between these three key metrics will be criucial. Will he officially abandon the 2% inflation target, or simply continue to turn a blind eye to it?

So what do the insiders think? Well, DeAnne Julius is a former member of the BoE’s Monetary Policy Committee, and she told the Beeb: ‘It's just possible that he could be lucky, he could be coming into this job at just the right moment because the economy is recovering, financial markets are strong. He's probably, as an outsider, the best person to change the culture in the Bank of England - something that's been needed for a while.’ However, she also said ‘he can’t wave a magic wand’.

And what about quantitative easing, which, to the layman, is printing money? There's no real way of knowing what he will choose to do in regards to this: perhaps he'll follow the US lead. If the Fed reduces its QE programme (which it has started threatening to do), then Carney may do the same - and vice versa.

Unfortunately for Carney, expectations have grown high – we’re desperate to get some growth from somewhere after all. Whether or not he can deliver in a manner which gets everyone singing his praises remains to be seen…

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