Mark Carney

Learn all about Mark Carney, the current governor of the Bank of England. Including his stance on interest rates and Brexit, plus how he’s affecting the markets.

Or, take a look at why the Bank of England’s Monetary Policy Committee meeting is so important to traders.

Who is Mark Carney?

Mark Carney is a Canadian economist who currently serves as governor of the Bank of England (BoE) and chair of the Monetary Policy Committee (MPC).

He’s been the Bank of England’s governor since 1 July 2013, and has announced his intention to step down in June 2019 – despite the official term being eight years.

Carney joined the BoE from the Bank of Canada (BoC), where he also served as governor.

Market Carney

Take a look at which markets have been affected by Carney so far, and which markets could move before he steps down in 2019.

Forex

When Carney joined the Bank in June 2013, interest rates were at 0.5%. Few predicted they’d be at the same level come the beginning of 2018.

Strong economic performance in Carney’s early years, however, saw GBP flourish despite the MPC’s reluctance to loosen monetary policy. Sterling rose above $1.71 shortly after his 2014 Mansion House speech, and above €1.40 in 2015.

Brexit put pay to that strong performance, although Carney’s first rate rise in November 2017 did help put GBP back to levels not seen since the vote, rising above $1.42 in April 2018. More economic growth could see the pound rise further. Watch GBP/USD and GBP/EUR.

Shares and indices

When the pound has struggled, the FTSE 100 has tended to thrive, as its more global-facing constituents benefit from competitive exports and valuable international profits. That’s certainly been the case for much of Carney’s term, and as GBP struggled after Brexit the index surged, ending 2017 on a record high.

The FTSE 250 has also proven a notable benefactor. As the UK economy has improved, the 100’s more domestically-focused sibling hit a series of new records. In late 2017, it surged past the 20,000 point mark for the first time.

But a selloff at the beginning of 2018 could set the picture for the rest of Carney’s term – especially if he delivers heavily-anticipated rate rises, putting a brake on economic growth and buoying sterling. Watch the FTSE 100 and FTSE 250.

Bonds

Carney has been clear that the process of reducing the Bank’s balance sheet will only start once interest rates are back at ‘non-emergency’ levels. In fact, quantitative easing (QE) has actually increased by £60 billion under his leadership — taking total asset purchases to £435 billion — with an additional £10 billion set aside to buy corporate bonds. That may have been good for prices, but it's been terrible for yields.

Predicting when Carney will change tack on monetary policy has been difficult during his term to date. But when the Bank starts offloading its massive levels of government and corporate debt, prices should start to drop. Watch UK Long Gilts

 

Mark Carney and the Bank of England

How will Mark Carney’s time as governor be assessed when he steps down? Here are three things to consider from his term so far.

He's a 'rock star' banker

Carney was the first non-Briton to take up the post of BoE governor in its 300-year history. His actions as BoC governor had attracted wide acclaim, and he was deciding how long his term would be, not committing to the expected eight years.

All of which contributed to his image as a ‘rock star’ of finance. And he’s rarely been away from the headlines, for both good and bad reasons – earning admiration from some quarters, and disdain from others.

He abandoned forward guidance

One of the first policies of Carney’s governorship, forward guidance was his pledge to provide ‘as much certainty about the path of monetary policy’ as possible. At the outset, that meant a promise not to consider raising rates any time soon.

In his 2014 Mansion House speech, though, Carney made a U-turn, signalling that interest rates could come before the end of the year. This sent markets into panic, and led one MP to label him ‘an unreliable boyfriend’. Later, he stated that he’d deliberately shaken up the markets to ward off complacency.

He’s been outspoken about Brexit

Brexit is undoubtedly the defining event of Carney’s tenure. Both before and after the vote, he’s been clear in his belief that leaving the European Union (EU) could be disastrous for the UK economy. That has led many Brexiteers to call for his head, and even to question the continued independence of the Bank.

Despite hinting that rates would rise in the near future before Brexit, his first adjustment was actually a reduction: to 0.25% in August 2016. Alongside a further £70 billion bond purchase, Carney was clearly worried about Brexit’s impact on the UK economy.

In November 2017, he finally announced a rate rise, back to 0.5%. Where interest rates and QE will be by the time of his departure remains to be seen.

Mark Carney: hawk or dove?

In his first 50 votes on monetary policy, Carney voted to maintain low rates 48 times. However, he’s also been clear that improved economic performance will lead to increased rates, and much of his policy has been dictated by Brexit. So while his voting record has been dovish, his statements err toward the hawkish.

On the single occasion Carney voted to reduce rates, they were cut to 0.25%; on the single occasion he voted to raise rates, they returned to 0.5%. So it’s clear that he holds sway over the committee.

Mark Carney: biography

Mark Carney (born 16 March 1965) is governor of the Bank of England and chair of the Financial Stability Board (FSB). He has a bachelor’s degree in economics from Harvard University and a doctorate in the same subject from Oxford University.

Carney spent 13 years working for Goldman Sachs before joining the Bank of Canada in 2003 as deputy governor. In 2004 he joined the Canadian Federal Department of Finance, then returned to the BoC as governor in February 2008.

Just one month into his term as governor, he cut rates by 50 basis points. In April 2009, he committed to maintaining low rates for at least a year. Both actions were hailed as helping Canada thrive throughout the financial crisis, even as other major economies struggled. They also helped Carney earn his reputation as a ‘rock star’ banker.

In November 2012, it was announced that Carney was leaving his post at the BoC to become governor of the Bank of England. He took up his post on 1 July 2013.

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