Merv leaves BoE on a high note

The governor of the Bank of England, Mervyn King, has decided that he will leave on a positive note, with his final set of quarterly forecasts suggesting things are looking up.

by Michael Northcott
Last Updated: 19 Aug 2013

If you have paid attention to the Bank of England or Merv’s speeches over the last few years, you’ll have noticed that he’s always popping up to revise down growth figures. Or he’ll talk some vagueness about ‘the rocky road ahead’ or a ‘zig-zag recovery’ (whatever that is) without telling us anything we didn’t already know. But today, for once, the bank said the future looks bright! Huzzah!

In his final Quarterly Inflation Report press conference before he steps down from the post next month, Merv said that the economy will grow faster this year, and inflation will reach its 2% target within two years. He added: ‘That’s the first time I’ve been able to say that since before the financial crisis. This hasn’t been a typical recession and it won’t be typical recovery. Nevertheless, a recovery is in sight.’

Of course, he also took the opportunity to reflect on his own time as governor over the last 10 years. ‘After 89 press conferences, including 82 under the banner of the Inflation Report, I have had my say. Now it is over to the next generation to have theirs.’ 

The ‘next generation’ is incoming Canadian Mark Carney, who apparently has big plans. In February he told MPs that the current tactic of targeting inflation sets a 'high bar' for any alternatives. Those could include targeting GDP, something he has apparently discussed with other high level figures, but not in any great detail.

It’s worth noting that the cost of Carney’s pay includes a £480,000 salary and a £250,000 housing allowance: a considerable increase on King’s pay packet - he earns £305,000 per year in total. Carney says it’s justified because he’s moving from Ottawa (cheap as chips) to London (cripplingly expensive). It seems a fair point, but it will make him one of the highest paid people on the public pay roll. 

Let’s hope whatever tricks are up his sleeve are worth all that taxpayer’s dough, eh?

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