Mark Carney Agrees to Extend Stay at Bank of England to Oversee Period of Potential Turbulence

Mark Carney, Bank of England

Image © Pound Sterling Live, Bank of England

After weeks of speculation, the governor of the Bank of England Mark Carney has said he will be officially staying on as governor for an extended term of 7 months until January 2020.

The news is likely to be positive for Sterling in the long-run as it eradicates potential policy uncertainty as the UK exits the European Union.

The chancellor of the exchequer Phillip Hammond has requested that Carney remain for an extended period, which the Governor agreed to in a letter of acceptance.

The Chancellor had cited a desire to keep carney at the helm so as to help ensure a smooth Brexit from the European Union.

"I recognise that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit," said Carney in accepting the offer.

Carney's credentials in providing stable leadership during the tumultuous market conditions that followed the shock Brexit vote confirm him as a steady hand at the tiller in times of stress.

Concerns have grown over recent months that the UK and EU are potentially headed for a 'no deal' Brexit which could well induce further significant market stresses, of which Sterling would likely bear the brunt.

Having an inexperienced leader at Threadneedle Street at such a moment would almost certainly be unhelpful.

The chancellor also asked deputy governor Jon Cunliffe to extend his tenure by another 4-years, which Cunliffe accepted, saying, “I look forward to continuing to work with Mark and all Bank colleagues to deliver our important mission over the coming years.”

From a policy perspective, the decision is likely a positive development for Sterling as Carney is expected to preside over a regime of interest rate rises which are on balance seen as supportive for a currency.

Should Brexit go smoothly and UK economic activity pick up steam in 2019 a Carney-led Bank of England would almost certainly accelerate the pace of interest rate rises as per recent guidance.

Speaking in parliament, chancellor Hammond said that he wanted to extend Carney's stay in order, “to ensure continuity during what could be quite a turbulent period for our economy in the early summer of 2019”.

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