The New Guv’nor Hits Town

Yesterday saw the next governor of the Bank of England, Mark Carney, appear before the House of Commons Treasury Committee. During the 4 hour session, which was universally well-received, a number of issues were raised, ranging from the conduct of monetary policy to his £800,000 plus salary and his 'political ambitions'. Thus, today's press is awash with interesting commentary, of varying political hues.

Here is a selction:

Daily Telegraph: Mark Carney signals push for UK growth

Guardian: Bank of England expected to be more aggressive under new boss

Alternatively, judge for yourself:

However, the one thing that struck me about all of this is the following quote in the Daily Telegraph piece:

"The Bank dropped a big hint that it would not raise rates to rein in inflation. 'Attempting to bring inflation back to target sooner by removing the current policy stimulus more quickly than currently anticipated by financial markets would risk derailing the recovery." it said.

Call me old-fashioned, but I can't see how this can be reconciled with the wording of the 1998 Bank of England Act:

"In relation to monetary policy, the objectives of the Bank of England shall be –

(a) to maintain price stability, and

(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment"

If there's anyone at the Bank or Treasury who reads this blog, maybe they'd care to explain... it would only be a cynic who might suggest that it has already been agreed that being above target is a good thing; it helps inflate away a portion of outstanding government debt.