Will Carney stay to chart UK's post-Brexit economic course?

Mr Carney testing a new polymer £5 note by dipping it into a tray of food at a market stall last month. The British central bank governor has less than 90 days before a self-imposed deadline to declare a desire to serve his full eight-year term thro
Mr Carney testing a new polymer £5 note by dipping it into a tray of food at a market stall last month. The British central bank governor has less than 90 days before a self-imposed deadline to declare a desire to serve his full eight-year term through 2021, or leave in 2018 as first planned.PHOTO: REUTERS

LONDON • Mark Carney might at last have some time to decide if he wants to stay on at the Bank of England (BOE) into the next decade.

After being too preoccupied with the Brexit vote fallout to think about his future, the central bank governor now has less than 90 days before a self-imposed deadline to declare a desire to serve his full eight-year term through 2021, or leave in 2018 as originally planned.

His new schedule of fewer interest-rate meetings means there is no monthly decision for the first time in October - giving him some breathing space to decide.

Britain's vote to leave the European Union could be a reason to stay, along with the lack of an obvious role for him to move on to.

Mr Carney may relish the challenge of charting the United Kingdom's economic course as negotiations on its divorce from the EU begin. It would also allow him to provide continuity for an economy where the post-referendum outlook remains clouded, while relieving Chancellor of the Exchequer Philip Hammond of the burden of finding a replacement.

"Brexit is ongoing and there is a need to see that through," said Mr Charles Goodhart, a former BOE policymaker and a professor at the London School of Economics, who expects Mr Carney to stay on. "The fewer uncertainties there are, the better. There is a need for stability."

The sterling's fall to a three-decade low has underscored that need, while fault lines within the post-referendum government over how to approach the EU exit show the potential for confusion. With Prime Minister Theresa May planning to activate Article 50 of the EU's Lisbon Treaty by the end of next March, starting two years of formal talks on an exit, a Carney departure in June 2018 risks further agitating uncertainty at a time when steadiness might be crucial.

Canadian-born Mr Carney, who also holds an Irish passport, joined the BOE in July 2013.

"To have someone come in with a different view would probably be quite disruptive," said economist James Rossiter at TD Securities in London and a former BOE official. "That's the bottom line, the stability that he can provide. To have somebody of his calibre continue in that job throughout the entire Brexit process would be a huge win for the UK." 

A BOE spokesman said nothing has changed and Mr Carney will announce his decision by year-end.

Mr Carney's decision might also depend on his rapport with politicians who did not choose him.

"It's not just his decision," said former BOE deputy governor John Gieve, who was also previously a Treasury official. "He can't do this without the approval of the Chancellor and Prime Minister."

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A version of this article appeared in the print edition of The Straits Times on October 07, 2016, with the headline 'Will Carney stay to chart UK's post-Brexit economic course?'. Print Edition | Subscribe