MARK Carney will today become the first foreign governor of the Bank of England in its 319-year history as he takes responsibility for turning Britain’s tepid economic growth into a fully fledged recovery.
The Alberta-raised 48-year-old – dubbed “the outstanding central banker of his generation” by George Osborne – will celebrate Canada Day by starting work at the organisation’s Threadneedle Street headquarters.
Carney is expected to radically change the way the Bank operates, making it less autocratic and adopting a more open media approach than his predecessors.
He is also considering giving greater long-term guidance about the direction of interest rates and monetary policy to boost transparency and help markets plan more accurately.
Carney’s reforms will, in part, reflect the enormous expansion in the Bank’s powers under his predecessor Sir Mervyn King, which culminated in the decision to hand it back regulatory control over swathes of the financial services industry.
Analysts are divided as to which measures they think Carney’s Bank will announce to prop up the economy, with some suggesting another round of quantitative easing, while others predict greater credit easing or a loosening of macroprudential tools. Others believe that George Osborne, the chancellor, may still make more radical changes to the Bank of England’s remit and targets.
“Despite the signs of stronger economic growth more recently, we still think that Carney will introduce further policy support soon after he arrives,” said Vicky Redwood of Capital Economics. “The most pressing challenge is likely to be thinking up ways to give the recovery more support.”
Carney’s first major official duty comes on Thursday when he chairs the Bank’s monthly monetary policy committee meeting. It is likely to keep interest rates at a record low, with any big changes expected to wait until the inflation report at the start of August.
“Those expecting a magician’s hat and a flash of smoke may well be disappointed,” said James Humphrey of Duncan Lawrie private bank.
“The main difference Carney will bring is likely to be one of tone and communication rather than anything more fundamental. He could end up being quite a political governor, in contrast to his predecessor.”
Carney’s performance will be watched closely at the Treasury, where the chancellor fought to convince the Canadian to swap Ottawa for London. Carney initially turned down the job but acquiesced following personal appeals from Osborne, a pay package worth £870,000 a year and a reduction to his term of office from eight years to five.
He will also have to find replacements for his two deputy governors. Paul Tucker will quit this autumn after missing out on the top job and Charlie Bean has announced his intention to retire next year.
The Bank job caps a varied career for the Harvard-educated banker, who began at Goldman Sachs before quitting to study for a doctorate at the University of Oxford. While there he managed the university ice hockey team and met his British wife, economist Diana Fox.
Fox, a member of a left-wing think tank, writes a blog reviewing eco-friendly products. Recently she has attacked what she claims to be damage caused by shipping beauty products around the world and bemoaned waste associated with teabags, while she has sympathised with the Occupy movement.
After rejoining Goldman in 1995 Carney rose through the ranks before jumping ship to the Bank of Canada. Following a period on secondment at the ministry of finance he returned to take the governor’s job in 2008.