Bank Of England New Governor Mark Carney Quizzed On Pay, Ambitions And Policy By MPs

Mark Carney, Incoming BoE Governor, Grilled By MPs

The incoming governor of the Bank of England has stressed he has no aspirations to "be an emperor" in his new role, saying he expects the bank to "make mistakes".

Mark Carney, who was grilled before MPs in Parliament for the first time since accepting the role, also reasserted his determination to remain absolutely independent from political influence.

And in what appeared to be a rebuff to George Osborne's reported attempted to put pressure on the Bank of England, calling for looser monetary policy to boost growth, the former Bank of Canada governor said: "I won't be commenting much on fiscal policy so I wouldn't expect the chancellor to comment on monetary policy."

Mark Carney has defended his pay packet to a committee of MPs

"There is no question about my independence as governor of the Bank of England. There is a governance structure that has been put in place, there is an absolutely clear structure.

"No political influence will come to bear on the execution of that remit," he said at his first appearance in front of the Treasury Select Committee.

Despite arriving 20 minutes late for the hearing, Carney looked comfortable and calm, asking MPs questions with deference, paying them compliments about their "political astuteness" and stressing that he would be happy for it to be put into statute that he should have a formal responsibility to reasonable requests from the Treasury Select Committee for reviews.

"That sounds reasonable," he said. "I would view that we have a responsibility to respond to reasonable requests."

Carney continually emphasised his "consensus" approach to governance. "The Bank of Canada operates absolutely on the basis of consensus," he said.

Committee member John Thurso said that come April, the Bank of England governor will be one of the most powerful central bankers in the world, given the committees he will sit on.

Will Carney be a an "emperor" or a "constitutional monarch?" he asked.

"No individual is going to have the expertise of the collective," Carney said. "So it cannot be an emperor, that cannot be the approach.

"It would be fundamentally limiting for the institution. I don't like your second option either. My view is that it would be a managing partner.

Earlier in the questioning, he admitted the bank would sometimes "make mistakes," adding: "I prefer low-levels of failure, but all institutions make mistakes."

"I would like to be on the right side more often than not. I fully imagine during the course of my term I will be outvoted."

Carney told MPs he believes his £250,000 housing allowance for his move from Canada to London is necessary in order to "equalise" his living standards here to those in Canada.

"It is consistent with the arrangements of many international executives when they move to this country, in order to equalise their living standards from where they come to where they arrive.

"I am moving from one of the least expensive capital cities in the world, Ottawa, to one of the most expensive."

Mark Carney has previously expressed some understanding and support for Occupy Wall Street

He also argued that his £874,000 a year pay package was equivalent to the pay and pension arrangement to the current governor, Sir Mervyn King. Carney will not have a pension.

And he added: "The combination of the two, is the equivalent of the pay and pension of the outgoing chairman of the FSA [Financial Services Authority]."

Asked if he would have take the job for less, he replied: "I was offered these terms and I accepted them."

Conservative MP David Ruffley said he was comfortable with Carney's pay package. "You will paid considerably less than recent England football managers and likely to have more success."

Carney was quizzed by the committee's chair Andrew Tyrie on his initial decision to decline to apply for the role. "My view in the summer of last year and up to the October deadline was not to proceed with an application for a few reasons.

"One was my current responsibility at the time as governor of the Bank of Canada and the personal aspects of the move.

"I have a young family and the transition of countries and schools here and then back again was, in the end, the decisive factor. It was a finely balanced decision.

"What changed was that subsequent to that decision, the Chancellor suggested to me the that the position could be for a period of 5 years and secondly I was informed that Charlie Bean had agreed that he would extend his term for an additional year from time of selection of the governor.

"Given the ages of my children it makes a material difference to come here for that time period [of five years].

"My eldest daughter will just finish high school, the other will have two years to reintegrate into a French school system."

Carney also said he was surprised by media speculation and attention upon his arrival in Britain, particularly rumours that he had plans for a political career in Canada.

"I have been surprised that it has been viewed as being politically astute, that me taking one of the most challenging jobs in another country, that that would be viewed as politically advantageous in my home country."

"If I had political ambitions I would have pursued them in Canada. I do not have political ambitions."

On top of the grilling by MPs, Carney submitted 45 pages of written evidence to the committee.

He was asked about his previously favourable comments regarding the Occupy Wall Street movement.

The former Goldman Sachs banker agreed that the perception that bankers have not paid the price for the 2008 financial crash was "a catalyst" to the worldwide protests of the Occupy movement.

"It wasn't just the fact that the financial crisis triggered a very sharp recession here as well as in the US, but that the senior-most officials in those financial institutions appeared to escape unscathed and not pay the price.

"In fact, in many of the institutions that failed, some of the CEOs received large payouts prior to their demise."

During the hearing, the Bank of England released figures showing inflation is likely to rise further in the near term and remain above 2% for the next two years.

Policymakers at the Bank have been increasingly criticised for failing to bring inflation back down to 2% since the financial crisis.

Carney said that in his view, "in these exceptional economic circumstances, with inflation above target, I think it would be useful to have a shared understanding about the timeline to return to target [of 2%], and an understanding of the implications on employment and on output.

"There is merit to considering federal reserve style threshold based guidance, and the question is, does one make that time contingent or stake continent, around a particular economic variable?"

Carney said he would welcome a debate over whether the Bank's Monetary Policy Committee should continue to set interest rates against the target of maintaining 2% inflation in the UK economy.

But he said: "It is clearly a decision for the Chancellor and the Government whether they are satisfied with the level of debate or the shape of the debate and are satisfied to reconfirm or adjust the remit as they see fit.

"I'm hesitating to dictate a process to those who have to make these decisions," he added.

Commenting on Carney' appearance, Dr Howard Archer, chief UK and European economist at IHS Global Insight told HuffPost UK: "The general impression coming from Mr. Carney’s comments that there may well eventually be some significant changes at the Bank of England under his tenure, but they will likely be evolutionary and gradual rather than quick and radical.

"There are also indications that Mr. Carney may be more flexible than Sir Mervyn King in how he wants the Bank of England to react to certain events.

"Meanwhile, Mr Carney gave little indication as to whether he would be pushing for more stimulative action, noting that the economy could look different when he arrives in July than it does now.

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