Mark Carney has said he will extend his period as governor of the Bank of England to June 2019, declining to serve a full eight-year term and instead standing down once Britain leaves the European Union.
In a letter to chancellor of the exchequer Philip Hammond, Mr Carney said he was "honoured" to serve longer than he had originally intended and, by extending his term until Britain has left the EU, hoped his decision would "help contribute to securing an orderly transition to the UK's new relationship with Europe".
In response, Mr Hammond praised the governor’s “highly effective leadership” of the Bank of England and willingness to serve longer “through a critical period for the British economy”.
The decision will keep Mr Carney as the most important British economic policy official, seeking to maintain economic and financial stability as the nation leaves the EU.
‘Supportive’
Earlier on Monday, prime minister Theresa May had backed Mr Carney to stay on until 2021, with her spokeswoman saying she would "certainly be supportive" if he decided to serve his full eight-year term.
The announcement from Mr Carney follows a period of sustained attacks by Brexiter critics who have been calling for him to resign ahead of time.
Some of those attacks were triggered by Mrs May’s speech to the Conservative party conference when she criticised the “bad side effects” of the Bank of England’s ultra-low interest rate policy.
But on Monday the prime minister’s spokeswoman said: “It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years. The PM has always had a good working relationship with the governor of the Bank of England and intends to continue that.”
Pressed on whether Mrs May saw the governor as “the right man for the job”, the spokeswoman replied: “Absolutely”.
Later on Monday the governor met Mrs May at Number 10.
Speculation swirled at the weekend that Mr Carney was considering leaving the job in 2018. When he accepted the post in 2012, he committed to serving the first five years of his term but left open the option of extending to the full eight.
Doom-laden forecasts
His critics claim the bank produced doom-laden forecasts for the UK economy to boost the Remain campaign.
Financial markets, which have pummelled sterling since Britain voted to leave the EU in June, have been watching developments closely for signs of further political uncertainty.
Sterling hardly moved on the news, suggesting it will be difficult for the currency to shake off the damage inflicted by the repeated assaults on the central bank’s competence and independence.
Mr Carney is understood to want to help steer the UK economy through the divorce negotiations with Brussels once the UK government triggers article 50 in March next year. – (Copyright The Financial Times Limited 2016)
