One member of Parliament called him a rock star, another compared him to the manager of England’s soccer team. Such has been the reception for Mark Carney as the incoming governor of the Bank of England, and some are beginning to wonder if the bar is now too high.
“Are you concerned that expectations of you may be set too high?” Labour MP Pat McFadden asked Mr. Carney at his debut on Thursday before a parliamentary committee in London that was reviewing his appointment, which takes effect in July.
“It’s a fair question,” the current governor of the Bank of Canada responded. “It’s a much broader, deeper institution that is in charge of these responsibilities as opposed to an individual. And as that becomes more apparent, then the individual becomes much less important.
Mr. Carney handled the hearing easily, at times injecting some humour. In a lengthy series of written answers to committee questions, for example, he noted that “I would like to achieve an exit in 2018 that is less newsworthy than my entrance.”
Mr. Carney may hope attention is eventually deflected away from him, but it was clear during the hearing that many MPs, and people across Britain, will be judging him on economic growth.
Gross domestic product contracted in the last quarter, and there are fears the country is headed into another recession, which would be the third in five years. That has put pressure on the Bank of England to take more measures to stimulate the economy and encourage banks to lend, particularly to small businesses.
Mr. Carney insisted he should be judged on price stability, not economic growth, but added he is open to a debate on different steps the central bank can take to help encourage stimulus. Some of those steps would involve a radical transformation in how the Bank of England operates, which for decades has pursued policies that target 2 per cent inflation.
Mr. Carney indicated he prefers a more flexible approach, but would not go so far as to adopt targets based on nominal GDP.
He also indicated that the Bank of England should consider following the example of the Bank of Canada, which has provided long-term guidance on interest rates to provide certainty to businesses and consumers.
Mr. Carney faced more than three hours of questioning by the 13-member treasury committee, with MPs probing everything from his compensation package to his thoughts on quantitative easing, wrongdoing at banks and inflation targets. One MP asked him to define a series of financial terms, and another wanted to know if he planned to run for public office.
His pay package, around $1.2-million in total, is comparable to those of other senior executives, and he is not receiving a pension, Mr. Carney said.
He added that his housing allowance, more than $400,000 annually, is justified because he is moving from low-cost Ottawa to a high-cost city. And he defended his decision to take the post for five years instead of the eight requested by the government, saying it meshed with the needs of his children. He also insisted he has no political ambitions.
The only somewhat testy moment came when John Mann, a Labour MP, challenged Mr. Carney about taking on bankers who break the law. The Bank of England will soon have new powers to regulate banks, and Mr. Mann challenged Mr. Carney to be as aggressive as U.S. regulators who have gone after dozens of banks.
When Mr. Mann went through a list of banks that have got in trouble, he added that “Canadian banks are involved in criminality as well.”
Mr. Carney shot back: “As the Governor of the Bank of Canada, I take issue with your description of Canadian banks.” He then listed the regulatory steps that needed to be implemented to ensure banks face consequences if they break the law.
After the hearing, MPs shook Mr. Carney’s hand, some slapping his back. Chairman Andrew Tyrie, a Conservative, told him before the hearing ended: “You have certainly demonstrated you know how to handle committees like this.”
“I think he’s the right candidate for the job, compared to others,” Mr. Mann said afterward.
But Mr. Mann said Mr. Carney’s popularity could become an issue with George Osborne, the Chancellor of the Exchequer.
“The Chancellor is clearly trying to attach himself [to Mr. Carney] and hoping that this is going to give him an internal boost inside government, and inside Parliament and that’s a bit of a problem [for Mr. Carney] and I think he’s going to have to deal with that.”Report Typo/Error