Mark Carney (left), the Governor of the Bank of England, takes his seat next to Paul Tucker, outgoing Deputy Governor, during a monetary policy committee briefing at the bank’s headquarters in London.
LONDON: There was good news for Mark Carney when he took over as Governor of the Bank of England yetserday — some fresh signs of recovery in Britain’s economy.
A couple of hours after Carney beat the commuter crowds on London’s Underground to start his first day at the central bank, data showed that British manufacturing enjoyed its strongest growth in more than two years in June.
New orders rose even faster, a hopeful sign that momentum in the long-weak factory sector might be sustained.
Separate figures showed Britain’s housing market, which is picking up after spending much of the past few years in the doldrums, got another fillip. Mortgage approvals in May hit their highest level since December 2009.
An improvement in two of the sectors hardest hit by the financial crisis might give Carney reason to move cautiously as he attempts to get the British economy into a higher gear.
“I am not sure he is the dove that everyone thinks he is, especially with the economy showing signs of life,” said George Buckley, UK economist at Deutsche Bank.
If surveys of other sectors this week matched manufacturing, they could soon be at a level at which the BoE has tightened monetary policy in the past, Buckley said, cautioning that the recovery could yet prove short-lived.
Carney, the former governor of the Bank of Canada, has said he wants to get the economy up to “escape velocity” and is widely expected to deploy new tactics to achieve it.
He has yet to show whether he might push for more bond-buying by the BoE which would pump fresh money into the economy. That was something his predecessor Mervyn King favoured but was ruled out by a majority of the bank’s other policymakers.
Carney is expected to use the kind of policy he pioneered as governor of the Bank of Canada by giving markets, households and businesses a clear steer of how long the BoE will keep interest rates at their record low of 0.5 percent.
He chairs his first meeting of the bank’s Monetary Policy Committee on Wednesday and Thursday.
Reuters
