Monetary policy overburdened, says BoE boss Carney

Mark Carney moved to address criticism from PM Theresa May
Mark Carney moved to address criticism from PM Theresa May

The governor of the Bank of England has said monetary policy has become overburdened and he would welcome Government policies to help boost the economy.

Speaking to the House of Lords Economic Affairs Committee, Mark Carney said the Bank’s policies could not “do it all”.

“Monetary policy has been in many respects overburdened in providing support to the economy,” he said.

“The Government has signalled some resetting of that burden between monetary, fiscal and other policies and that is welcome.”

He said earlier this month that the Bank would not take instructions on its policies from politicians, just a week after Prime Minister Theresa May took a swipe at the impact of the Bank’s actions on “ordinary” people.

Mr Carney said the Bank’s independence was not under threat because there were no plans for Parliament to debate a change to its remit.

Mr Carney also moved to address criticism from Mrs May, who used her conference speech to launch a surprise attack on the Bank, saying there had been “bad side-effects” from its moves to slash interest rates and shore up the economy since the financial crisis and promising “a change has got to come”.

On savers, hammered by low interest rates, the governor said: “To target a specific group to a large subset is not consistent with overall support, for providing prosperity.

“There’s not one group who are saving and one group that are asset holders. There is a big group who have debt and no assets ... which is partly a legacy of the previous crisis.”

However, he recognised the plight of savers, adding: “Yes, absolutely, we have sympathy, yes we understand frustrations.

“Our contribution is to focus on our remit to get this economy in a position where inflation is where it needs to be and then move forward.”

Referring to concerns surrounding a potential exodus of jobs and financial services from the City of London in the wake of the Brexit vote, he said some global banks would be in a position to “adjust some activity over the course of the next year if they saw fit”.