New boss at the Bank of England

Today sees Mark Carney officially take over as the head of the UK’s central bank. He is the first foreigner to become governor of the Bank of England in the 319-year history of the institution, and expectations are high. He replaces Sir Mervyn King who served ten years, exceeding the standard term of office, which is currently eight years. Mr. Carney has already stated that he will only do the job for five years, and he seemed reluctant to initially accept the position. The Chancellor, George Osborne, had to tempt him with a total package worth £874,000 – six times more than David Cameron’s salary of £142,500.

Mr. Carney, who is Canadian, has an impressive resume having served successfully as the governor of the Bank of Canada, and also as a banker at Goldman Sachs. However, a tough task awaits him as interest rates are at an all-time low and stimulus programmes are in place to help revive a recovering economy following the financial crisis. It is expected that he will oversee the Bank’s exit from these measures.

DeAnne Julius, former MPC member, however is optimistic that Mr. Carney could be the man for the job to set the Bank of England on the right path. She says that “He’s probably, as an outsider, the best person to change the culture in the Bank of England – something that’s been needed for a while.” Part of this optimism could be for his handling of monetary policy in Canada, which was the only G7 nation that didn’t have to bail out its banks.

Mr. Carney hits the ground running as he attends a pre-briefing for the Bank’s Monetary Policy Committee (MPC) this morning. Wednesday will then see him chair a full meeting of the MPC. He is not expected to make any public announcements until August, but it is thought that he favours more quantitative easing to help the UK economy to pick up. However, six of the nine-member MPC are currently blocking this proposition.

It is clear that Mr. Carney has inherited a tough job, but only time will tell whether he’s up for it.