Under fire, Carney says to stay extra year at Bank of England

Bank of England Governor Mark Carney said on Monday he has decided to stay in charge of the central bank for an extra year until the end of June 2019 to help smooth Britain’s departure from the European Union.
Bank of England Governor Mark Carney said on Monday he has decided to stay in charge of the central bank for an extra year until the end of June 2019 to help smooth Britain’s departure from the European Union.PHOTO: REUTERS

LONDON, Oct 31 (REUTERS) - Bank of England Governor Mark Carney said on Monday he has decided to stay in charge of the central bank for an extra year until the end of June 2019 to help smooth Britain's departure from the European Union.

Carney, who has come under heavy criticism from pro-Brexit politicians for warning before June's referendum of the economic hit of a vote to leave the EU, could have stayed at the BoE until 2021.

But he opted against serving the full eight years available to him. "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 finance minister Philip Hammond which was published by the BoE. "By taking my term in office beyond the expected period of the Article 50 process (for Britain to leave the EU), this should help contribute to securing an orderly transition to the UK's new relationship with Europe," he said.

Earlier on Monday, Prime Minister Theresa May backed him to extend his term as she sought to dampen political pressure on the central bank chief.

Sterling, which has slumped around 20 per cent since the Brexit vote on worries about Britain's economic prospects, rose after Carney's announcement, hitting its highest level on Monday at US$1.2240 (S$1.70).

Carney had promised to announce by the end of the year whether he would stick to his original departure date of mid-2018, when Britain would likely be deep in the process of extricating itself from the EU.

Most economists taking part in a Reuters poll published last week expected Carney to agree to stay on beyond 2018.

Speculation had mounted about the future of the Canadian, the first foreigner to run the British central bank in its 322-year history, after May took the unusual step of criticising the effects of low interest rates earlier this month.

Carney has since faced criticism from some eurosceptic lawmakers in the ruling party who accused him of compromising the bank's independence with his warnings, before the referendum, of the economic risks of voting to leave the EU.

The career plans of a man once dubbed the "outstanding central banker of his generation" have gripped financial markets. Some of the recent slide in sterling and rise in government bond yields have been attributed by analysts to the prospect of Carney leaving the BoE.