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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There are two sides to the Muslim segregation story

White families must also be prepared to have Muslim neighbours. 

Dame Louise Casey finally published her review on social integration in Britain. Although it mentions all communities, there is a clear focus on Muslim communities. However, the issues she raises - religious conservatism, segregation in some areas and Muslim women experiencing inequalities -  are not new. In this case, they have been placed in one report and discussed in the context of hindering integration. If we are truly committed to addressing these issues, though, we have a duty of care to discuss the findings with nuance, not take them out of context, as some tabloids have already done.

The review, for example, highlights that in some areas Muslims make up 85 per cent of the local population. This should not be interpreted to mean that Muslims are choosing to isolate themselves and not integrate. For a start, the review makes it clear that there are also certain areas in Britain that are predominantly Sikh, Hindu or Jewish.

Secondly, when migrants arrive in the UK, it is not unreasonable for them to gravitate towards people from similar cultural and faith backgrounds.  Later, they may choose to remain in these same areas due to convenience, such as being able to buy their own food, accessing their place of worship or being near elderly relatives.

However, very little, if any, attention is given to the role played by white families in creating segregated communities. These families moved out of such areas after the arrival of ethnic minorities. This isn't necessarily due to racism, but because such families are able to afford to move up the housing ladder. And when they do move, perhaps they feel more comfortable living with people of a similar background to themselves. Again, this is understandable, but it highlights that segregation is a two-way street. Such a phenomenon cannot be prevented or reversed unless white families are also willing to have Muslim neighbours. Is the government also prepared to have these difficult conversations?

Casey also mentions inequalities that are holding some Muslim women back, inequalities driven by misogyny, cultural abuses, not being able to speak English and the high numbers of Muslim women who are economically inactive. It’s true that the English language is a strong enabler of integration. It can help women engage better with their children, have access to services and the jobs market, and be better informed about their rights.

Nevertheless, we should remember that first-generation Pakistani and Bangladeshi women, who could not speak English, have proved perfectly able to bring up children now employed in a vast range of professions including politics, medicine, and the law. The cultural abuses mentioned in the review such as forced marriage, honour-based violence and female genital mutilation, are already being tackled by government. It would be more valuable to see the government challenge the hate crimes and discrimination regularly faced by Muslim women when trying to access public services and the jobs market. 

The review recommends an "Oath of Integration with British Values and Society" for immigrants on arrival. This raises the perennial question of what "British Values" are. The Casey review uses the list from the government’s counter-extremism strategy. In reality, the vast majority of individuals, regardless of faith or ethnic background, would agree to sign up to them.  The key challenge for any integration strategy is to persuade all groups to practice these values every day, rather than just getting immigrants to read them out once. 

Shaista Gohir is the chair of Muslim Women's Network UK, and Sophie Garner is the general secretary and a barrister.