September 4, 2018 / 12:33 PM / in a month

Carney says he is ready to stay longer at Bank of England

LONDON (Reuters) - Bank of England Governor Mark Carney said on Tuesday he was ready to extend his time in charge of the central bank to help Britain’s economy as it leaves the European Union.

When Carney moved to London from his native Canada in 2013, he agreed to stay at the BoE until 2018. Two years ago, after Britain voted for Brexit, he extended his term by a further year, until June 2019.

That would keep him in his job until shortly after Britain’s scheduled exit from the EU in March next year. But London and Brussels have not yet agreed the terms of their future relationship, raising the prospect of a damaging Brexit.

“Even though I have already agreed to extend my time to support a smooth Brexit, I am willing to do whatever else I can in order to promote both a smooth Brexit and an effective transition at the Bank of England,” Carney told members of parliament on parliament’s Treasury Committee.

“The Chancellor (Philip Hammond) and I have discussed this. I would expect an announcement to be made in due course.”

The Evening Standard newspaper said last week that Hammond wanted Carney to stay longer at the BoE, a move which would allow the finance ministry to focus squarely on Brexit negotiations over the next few months.

The pound recouped some losses on Tuesday after Carney said he was ready to stay, but concerns over Brexit kept a lid on the currency’s gains. It suffered its biggest daily drop against the euro in more than three months on Monday after European Union chief Brexit negotiator, Michel Barnier said he strongly opposed Britain’s latest proposal.

Carney won plaudits from investors for his response to the Brexit vote shock in 2016, when the central bank promised to pump liquidity into markets if needed and cut interest rates to a historic low.

But the Canadian has angered many Brexit supporters who accuse him of overstepping his remit by warning, before the referendum, of a hit to Britain’s economy in the event of a vote to leave the EU, and of over-reacting to the referendum result.

FILE PHOTO: Bank of England Governor, Mark Carney, speaks during the central bank's quarterly Inflation Report press conference in London, Britain August 2, 2018. Daniel Leal-Olivas/Pool via Reuters/File Photo

Carney said on Tuesday it might be easier for the government to find his replacement once the terms of Brexit are known.

“There are some advantages for that process to be run in the context of full knowledge both of the government of the day and the applicants, those interested parties in the position, of the exact form of Brexit that the country has decided to take,” he said.

As well as chairing the nine-member Monetary Policy Committee which sets official British interest rates, the governor of the BoE has powers over the banking sector.

The extent to which Britain will set its own banking rules will be determined by the terms of any Brexit deal with the EU.

Carney also reiterated that Britain’s economy would suffer a shock if the country leaves the EU without reaching a deal, saying households would feel a renewed squeeze on their incomes for a few years.

The fall in the value of the pound after the 2016 Brexit vote pushed up inflation in Britain at a time of only modest wage growth.

Carney said a no-deal Brexit would cause sterling to fall again although it would rise if there is an agreement.

Reporting by David Milliken and Kylie MacLellan; Writing by William Schomberg; editing by Michael Holden and Angus MacSwan

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below