Friday 31 January 2020 6:00 am

Carney goes out not with a bang but a whimper

There may be a part of Mark Carney that will be glad to see the back of the Bank of England.

His eight-year tenure, which ends in March, has been dominated by political turbulence and so, perhaps inevitably, rows about the politicisation of the Old Lady.

Threadneedle Street is not alone in being pulled into the orbit of politics. Whether through Donald Trump’s relentless attacks on the Fed’s independence or the ECB’s creeping expansion into sensitive policy issues, central banks have been politicised — whether through accident or design.

Looking back on Carney’s tenure as the 120th governor, there was an early row about “forward guidance”, a policy designed to give markets clearer signals about rates.


Carney said the Bank would hold rates at 0.5 per cent until unemployment fell to 7 per cent or lower. The labour market performed better than many — including Carney — expected, and in the end the Bank’s policy just left people confused.

Labour MP Pat McFadden dubbed Carney an “unreliable boyfriend”. The former Goldman Sachs man then had to wrangle with the Scottish referendum before facing his biggest political challenge: Brexit. Carney warned Brexit could lead to recession, much to the fury of Leavers like Iain Duncan Smith and Michael Howard who accused the Bank of a “woeful failure” to be balanced.

Yet to many, he appeared an adult in the room as politicians squabbled.

Throughout all this, unemployment continued to fall as the UK economy defied what Boris Johnson went on to call “the doomsters and the gloomsters”.

Carney’s period as governor could be caricatured as one of inaction, but leaving rates unchanged is no less a decision than deciding to cut or raise.

Most of the Bank’s firepower has been dedicated to the controversial policy of quantitative easing — buying up government debt.

He’s also been busy in other areas, not least climate change and as an active supporter of diversity in the City.


He worked closely with his successor, Andrew Bailey, and between them, they provided reassurance to a sector felt by many to have been ignored by ministers during years of political upheaval and uncertainty.

Bailey’s role as an architect of post-Brexit trade means he’s well placed to oversee the Bank – and the City – as Britain embarks on a bold, if uncertain, new phase.

Main image: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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