Money

Agustín Carstens rules himself out of Bank of England governor race


One of the frontrunners to be the next governor of the Bank of England has ruled himself out, limiting the Treasury’s choice of candidates to succeed the outgoing governor, Mark Carney.

Agustín Carstens, the former finance minister and head of Mexico’s central bank, said he planned to stay as head of the Bank for International Settlements, the Basel-based organisation that promotes global monetary and financial stability.

Mentioned in almost every list of frontrunners for the Bank of England governor role, Carstens said: “I left being a governor in my own country to take up a position in a global institution and, for me personally, that was an attractive path to take.

“To go back from a global institution to a national central bank in a country that is not mine, that would be hard to justify to myself. I’m happy where I am now; I’m not interested in moving.”

The Treasury has delayed appointing a replacement for the Canadian Carney, who was appointed by George Osborne in 2013 to help foster a recovery using unconventional tools, including allowing the central bank to become a major lender to the UK government.

Carney has twice extended his tenure at the request of the chancellor, Philip Hammond, who wants him to stay on until the Brexit process is complete.

Officials at the Bank’s headquarters on Threadneedle Street are understood to be bewildered that Hammond has allowed the governor situation to stretch into the second half of 2019, leaving it to his successor to make the appointment.

A new Tory administration run by Boris Johnson would be expected to put Jacob Rees-Mogg into No 11, allowing the MP for North East Somerset to make the final choice.

Labour MP Rachel Reeves, the head of the commons business committee and a former economist at the Bank before entering parliament, has called for the next governor to be a woman.

Hammond is known to have courted Raghuram Rajan, the former governor of the Bank of India who is a professor at the Chicago Booth School of Business. Rajan has not ruled himself out.

Other candidates known to be under consideration are Andrew Bailey, the head of the City regulator, the Financial Conduct Authority, who is a former deputy governor at the Bank of England, alongside the Bank’s chief economist, Andrew Haldane, and the deputy governor for financial stability, Sir Jon Cunliffe. Sharon White, the head of the communications industry regulator Ofcom, and Shriti Vadera, the chair of Santander UK, are also believed to be on the list of potential candidates.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Carstens said all central bankers would have a difficult job over the next few years, treading a fine line between keeping interest rates low to spur growth and increasing the risks of financial instability.

“We recognise that a lot of what has been done by central banks during the last decade has been very important. We wouldn’t have got out of the global financial crisis without very accommodative monetary policy,” he said.

“The way forward is a very narrow path, normalising policy while achieving monetary stability and financial stability. Central banks in the coming years cannot be that accommodative without risking major financial stresses. If they allow too much accommodation for too long there is the risk of major asset mispricing and allowing inflation to build up, which would eventually require a stronger monetary policy correction.”



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.