The governor, who has been dubbed “extraordinarily charismatic” by former colleagues will be faced with the monumental task of guiding Britain through the normalisation of post-crisis monetary policy.
He is expected to encourage a more transparent and media friendly central bank and to push for greater forward guidance of interest rates to allow markets to plan ahead.
Commentators are split on what policy tools he will use first, with some predicting another round of quantitative easing and others expecting greater credit easing.
Read what Portfolio Adviser’s editor, Gary Shepherd, has to say about the task Carney faces…
Nigel Green, deVere Group’s chief executive, said: “Carney has a fondness for, and has been asked by the chancellor to pursue ‘forward guidance’, which is where a central bank flags up what is expected to happen to interest rates way beyond its next policy vote.”
“We expect the BoE governor to devalue the pound by up to 15%. This would be another devastating blow for Britons overseas who live on a fixed sterling income.”
‘Zombie Britain’
Meanwhile, Schroders’ European economist, Azad Zangana, believes Carney has just arrived to ‘Zombie Britain’.
“He is likely to find a household sector riddled with debt and overly leveraged towards a housing market that appears to be over-valued by traditional measures, a hawkish oddly-formed coalition government struggling to reign in the nation’s public deficit, a corporate sector refusing to invest, with some parts surviving only thanks to low interest rates, and a banking system that is partially functioning, under-capitalised, and lacks competition. Welcome to zombie Britain Mr Carney.”
Click here to read more from Zangana…
Carney’s first monetary policy committee meeting will be held on Thursday where the committee will vote on interest rates. Consensus expectation is they will be kept at a record low until at least after the inflation report due at the start of August.
