Bank of England Governor Mark Carney will stay in his role until 2019, the Bank of England confirmed on Monday evening, ending weeks of speculation about the governor’s future with the bank.
Carney took over from Mervyn King as governor in 2013, initially committing to a five-year term at the Old Lady of Threadneedle Street, despite the traditional protocol of an eight-year term for governors.
However, following Britain’s decision to leave the European Union, Carney has extended his term a further year, allowing him to remain governor until the point when the UK should formally have left the EU.
“Recognising the importance to the country of continuity during the UK’s Article 50 negotiations, and notwithstanding those personal circumstances, I would be honoured to extend my time of service as Governor for an additional year to the end of June 2019,” Carney said in a letter to Chancellor Philip Hammond.
Prime Minister Theresa May has promised that the UK will trigger Article 50 no later than the end of March 2017, giving Britain two years from that date to negotiate an exit from the 28-nation bloc. Carney’s original commitment would have meant him leaving his post right in the middle of any negotiations.
Speculation about Carney’s future has been rampant in recent weeks, with the governor coming in for intense criticism from pro-Brexit politicians in particular. Conservative MEP Daniel Hannan has been a particularly harsh critic, repeatedly calling for Carney’s resignation in recent days.
He has also faced attacks from the likes of former Tory leader William Hague, failed Conservative party leadership candidate Michael Gove, and former chancellors Norman Lamont and Nigel Lawson.
Most of his critics feel he was too supportive of the Remain campaign prior to the EU referendum, and has politicised a role that is supposed to be purely technocratic.
While it will likely be an unpopular decision among Eurosceptic Conservatives, Carney’s extension of his term is sure to be greeted positively within the financial markets where he is widely regarded as a serious, credible, calm hand at the tiller of British monetary policy. He has been referred to as “the only adult in the room” when it comes to the government’s economic talks.
However, there may be some disappointment, given that on Monday it had widely been expected that Carney may stay for the full statutory term as governor, leaving his post in 2021. The Financial Times reported on Sunday evening that friends of Carney say he was “leaning strongly towards staying in his post” until 2021.
The pound was little moved on the announcement. Here’s the chart:
You can read the full text of the letter Carney sent to Chancellor Philip Hammond, as well as Hammond’s response, below:
Further to our discussions and those with the Prime Minister, am writing to confirm my intentions regarding my term as Governor of the Bank of England.
As you will recall, was appointed as the next Governor in November for the statutory eight-year period of office as set out in the Bank of England Act At that time, clearly signalled my intention to serve for five years. As testified to Parliament, that intention was driven by personal, family considerations. In addition, believed that five years would allow a reasonable timeframe to remodel the Bank to reflect its new, much broader responsibilities, and to complete the most important elements of the domestic financial reform agenda. Five years of service would also coincide with my maximum term as Chair of the Financial Stability Board.
Since then, my personal circumstances have not changed but other circumstances clearly have, most notably the UK’s decision to leave the European Union. Recognising the importance to the country of continuity during the UK’s Article 50 negotiations, and notwithstanding those personal circumstances, I would be honoured to extend my time of service as Governor for an additional year to the end of June 2019. By taking my term in office beyond the expected period of the Article 50 process, this should help contribute to securing an orderly transition to the UK’s new relationship with Europe.
It is an honour and a privilege to serve in this important role. deeply appreciate your support, that of the Prime Minister, and that of colleagues at the Bank, and look forward to continuing to promote the good of the people of the United Kingdom during this crucial time for the country.
Hammond responded, saying:
Thank you for your letter of 31 October.
I am very pleased to hear that you intend to continue as Governor of the Bank of England until the end of June 2019. This will enable you to continue your highly effective leadership of the Bank through a critical period for the British economy as we negotiate our exit from the European Union.
I am grateful for your contribution to both monetary and financial stability to date, and I look forward to your continuing contribution in the future.