Carney charms MPs (once they get over his pay)

The next BoE governor reveals his plans for expectation management, but stays firmly conventional.

Against a background of the Bank of England's monetary policy committee deciding to keep interest rates flat at 0.5 per cent for another month — meaning it has now been four full years since the last rate change — the next governor of then Bank of England, Mark Carney, appeared before the Treasury select committee and and gave some of the first hints as to how he plans to run the country's central bank.

Of course, before he could do that, he had to justify his pay to the assembled MPs. Admittedly, Carney will be payed a lot: £480,000 a year base salary, plus a £250,000 "housing allowance", well above his predecessor Mervyn King's £305,000. But he defended his salary by pointing out that "I'm moving from one of the least expensive capital cities in the world – Ottawa – to one of the most expensive capital cities in the world," and by noting that his pay was in line with the outgoing head of the FSA, whose responsibilities are being merged with the Bank of England's.

David Ruffley MP was behind him, at least:

On the question of pay, you will be paid considerably less than recent England football managers and I think you are likely to have more success than them.

Eventually, Carney was allowed to talk about monetary policy, and revealed that, while he isn't going to be the loose-cannon central banker of our dreams — NGDP targeting and helicopter drops are out of the question — he does plan to be somewhat more aggressive than King.

In Canada, where Carney was the head of the central bank before his appointment here, there are formal reviews of the inflation target on a five-yearly timeframe. Here, by contrast, the target is — and has been since it was introduced fifteen years ago — for inflation to be within a one percentage point band of two per cent annually. MPs asked whether that target should be changed or loosened, and, while Carney did not directly offer any alternatives, he did argue that there should be that debate, albeit a "short" one.

The "high bar" that Carney thinks needs to be met before change can happen means that NGDP targeting — the idea of mandating the Bank to aim for a particular level of nominal (un-adjusted for inflation) GDP — is unlikely. He remains "far from convinced" that it could work. Similarly, while the USA has a dual mandate, requiring the Fed to target both inflation and unemployment, Carney isn't necessarily aiming for that as an end-stage for Britain either. He starts "from a position of considerable monetary stimulus to take up the slack", but believes that, for the time being, there is enough flexibility under the normal target to pull that off.

Where Carney marked the most substantial break with King was in his expressed belief that communication could be used more effectively to achieve the aims of the bank.

A huge part of monetary policy is expectations management — ensuring that people believe that the future economy is going to be certain way, and act on that belief. That's because many economic prophecies are self-fulfilling. If you tell everyone the stock market will crash, and have enough credibility that they act on it, then they will pull money out of the market and cause that very crash.

As a result, there's a huge difference between a central bank having a plan to keep interest rates low for a further two years, and a central bank saying it has a plan to keep interest rates low for a further two years. Carney understands that difference, and apparently plans to make the most of it.

No matter what happens, though, he has reiterated that he is only going to stay in charge for one five-year term, due to family commitments and a desire to get out of the high stakes world of central banking while he still can. While MPs expressed disbelief that someone could let something so prosaic as a family affect their job, Carney explained that he hoped to achieve all his goals in that span, and to make an exit "that is less newsworthy than my entrance".

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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PMQs review: David Cameron's call for Jeremy Corbyn to resign will only help him

 "For heaven's sake man, go!" The PM's appeal was sincere but the Labour leader can turn it to his advantage. 

It is traditionally the leader of the opposition who calls for the prime minister to resign. At today's PMQs, in another extraordinary moment, we witnessed the reverse. "For heaven's sake man, go!" David Cameron cried at Jeremy Corbyn, echoing Oliver Cromwell's address to the rump parliament ("in the name of God, go!") and Leo Amery's appeal to Neville Chamberlain in the 1940 Norway debate.

While it was in his "party's interests" for Corbyn to "sit there", Cameron said, it wasn't "in the national interest". Some will regard this as a cunning ruse to strengthen the Labour leader's position. But to my ear, Cameron sounded entirely sincere as he spoke. With just two months left as prime minister, he has little interest in seeking political advantage. But as he continues to defy appeals from his own side to resign, the addition of a Tory PM to the cause will only aid Corbyn's standing among members. 

After rumours that Labour MPs would boycott the session, leaving a sea of empty benches behind Corbyn, they instead treated their leader with contemptuous silence. Corbyn was inevitably jeered by Tory MPs when he observed that Cameron only had "two months left" to leave a "a One Nation legacy" (demanding "the scrapping of the bedroom tax, the banning of zero-hours contracts, and the cancelling of cuts to Universal Credit"). Cameron conceded that "we need do more to tackle poverty" before deriding Corbyn's EU referendum campaigning. "I know the Hon. Gentleman says he put his back into it. All I can say is I'd hate to see it when he's not trying." 

The other notable moment came when Theresa May supporter Alan Duncan contrasted Angela Merkel with "Silvio Borisconi" (a Hansard first). Cameron replied: "Neither of the people he's talking about are candidates in this election, it's an election I will stay out of ... I was given lots of advice, one of them was not to go to a party with Silvio Berlusconi and I'm glad I took it." Given the recent fate of those who personally mocked Johnson during the referendum campaign, Duncan's jibe may not do May's cause much more help now. 

George Eaton is political editor of the New Statesman.