Carney sets high bar to change at Bank of England

Thu Feb 7, 2013 12:57pm EST
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By William Schomberg and David Milliken

LONDON (Reuters) - Mark Carney, the next governor of the Bank of England, cooled expectations that he would push for sweeping changes in British monetary policy, but gave a taste of the approach he will bring from Canada when he takes over later this year.

In his first detailed comments on Britain's near-stagnant economy, Carney said on Thursday that committing to keeping monetary stimulus unchanged for a set period might be needed to help restore confidence among firms and households.

That is something that Carney introduced at the Bank of Canada, an unusual step at the time and one which was subsequently adopted in the United States, adding to his reputation as one of the world's best central bankers.

But Carney, who will be the first foreigner to run the Bank of England in its 318-year history, used a question-and-answer session with British lawmakers to play down speculation that he would rapidly press for bigger changes at the bank.

He was also quick to note Britain's policy of focusing on inflation but not at the expense of choking the economy.

"In my view, flexible inflation targeting - as practiced in both Canada and the UK - has proven itself to be the most effective monetary policy framework implemented thus far," the Canadian central bank chief said.

"As a result, the bar for alteration is very high," he said.

However, he said an early debate involving the government about the details of the bank's mandate would be welcome - in particular how much time the central bank should take to bring above-target inflation to heel.   Continued...

A video grab image shows Mark Carney, the next governor of the Bank of England, answering questions from a parliamentary committee in the Houses of Parliament in central London February 7, 2013. REUTERS/UK Parliament