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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Mark Carney to stay at Bank of England until 2019, sparking relief and disappointment – as it happened

Governor of the Bank of England Mark Carney leaving 10 Downing Street this afternoon.
Governor of the Bank of England Mark Carney leaving 10 Downing Street this afternoon. Photograph: Daniel Leal-Olivas/AFP/Getty Images

Closing summary: Carney surprises everyone

It’s been a long old day, and quite a dramatic one as Mark Carney’s future came to a head faster than most experts expected.

No-one really predicted that the BoE governor would split the difference between his fans, and his critics, and plump to do an extra 12 months duty at Threadneedle Street.

That’s why the decision has been greeted fairly calmly, with the government insisting it’s good news, but businesses understandably concerned about what happens in 2019.

Sir Martin Sorrell probably spoke for many business leaders when he said it was ‘a pity’ that Carney wouldn’t be at the helm until 2021.

Whatever you think about the European Union, there’s an argument that it’s better not to change central bank governors in the middle of the Brexit negotiations. Now, the Treasury has almost three years to find the perfect candidate to replace Carney on 1 July 2019 and help steer Britain into its post-EU future.

The immediate reaction from the City is still quite positive, with the pound up 0.6 of a cent at $1.2245.

We’ll may find out one day how hard Theresa May fought to keep Carney, or whether this compromise really suits all parties.

We may also find out whether the governor still has serious political ambitions back in Canada. Several commentators, including Bloomberg’s Jill Ward, have suggested he has an eye on the next federal elections, which are due in late 2019....

With that, I’m wrapping up for the night. Larry Elliott’s full story on Carney’s decision is now live. Here’s a flavour:

Mark Carney to serve extra year as Bank of England governor

Mark Carney has ended weeks of speculation about his future by agreeing to stay on as governor of the Bank of England until Brexit negotiations with the EU have ended in 2019.

Despite being urged by the prime minister, Theresa May, and the chancellor, Philip Hammond, to serve a full eight-year term at Threadneedle Street, until 2021, Carney said he would only agree to remain in place for an extra year. Hestarted in the job in July 2013.

The governor said in a letter to Hammond that he had intended to leave the Bank for personal reasons after five years, but the altered landscape for the UK following the vote in June to leave the EU had caused him to change his mind.....

Goodnight, and thanks for reading and commenting. GW

Economists give a cautious welcome

Elizabeth Martins, an economist with HSBC, has dubbed Carney’s decision a halfway house (which is a relief, as I plumped for that term earlier :) ).

She says:

“I guess that markets would have liked to see a 2021 extension, and expected it given indications in the media. But this will go down better than an earlier departure.”

(that’s via Reuters)

And Howard Archer of IHS Global Insight has given the news “two cheers out of three”, and suggests Carney’s detractors should rein themselves in:

Now that Mr. Carney has made his intentions clear, it is to be hoped that everyone gives the Governor maximum support, including his critics.

The UK faces a very challenging period ahead which will be demanding for all policymakers. Matters will not be helped by sniping at the Bank of England Governor or making statements that seemingly question at the Bank of England’s independence

Updated

Some Bank of England trivia, from Newnight’s Lewis Goodall:

Jacob Rees-Mogg, the Conservative MP who clashed with Mark Carney at several parliamentary hearings, doesn’t appear very happy with tonight’s news.

He told Reuters that:

“I think the uncertainty was bad, but I still think he ought to have gone because of his bias over Brexit.”

Some pro-Brexit Conservative MPs aren’t best pleased that Mark Carney will remain at the Bank of England until 2019, says the City AM newspaper.

One leading Tory brexiteer told them that:

My sense is that if [Carney] is going to stay to 2019 he needs to find a way to row in behind the Prime Minister and start to find a way to be a bit more positive.

I would like him to stay and do a good job, and demonstrate some enthusiasm for leaving the EU, seeing as we are going to.

More here.

Duncan Weldon, head of research at Resolution Group, suggests Mark Carney has played the game rather well....

Adam Marshall, Director General of the British Chambers of Commerce (BCC), is pleased that Mark Carney has decided his future.

But he’s also concerned that his replacement (whoever she or he is) will take over at a critical time:

”Businesses want stability at a time of economic change, particularly at key institutions like the Bank of England.

Firms will be reassured that the recent speculation over the timing and nature of Mark Carney’s departure has been put to rest. However, the Governor will still be leaving at a sensitive time for the economy - so businesses will want to see a clear and ordered transition plan.”

An interesting reaction from Rupert Harrison of BlackRock, the asset manager.

Harrison is a former advisor to George Osborne, who appointed Carney in the first place.

May: Carney's decision is good news for UK

British prime minister Theresa May has welcomes Mark Carney’s decision to extend his term at the Bank of England by one year.

May’s spokeswoman says (via Reuters).

“The prime minister welcomes the governor’s decision to stay on beyond his initial five-year term.

This is good news for the UK. It will provide continuity and stability at the Bank of England as we negotiate our exit from the European Union and look to take advantage of the opportunities that Brexit will present.”

However, there’s no word on whether May would rather Carney had stayed until 2021.

Updated

Zing!

Tyrie: Carney has a lot of explaining to do....

Andrew Tyrie, the influential chair of parliament’s Treasury Committee, is determined to find out why Mark Carney is only going to serve a six year term.

And he’s promising to ask the governor a lot of searching questions when they next face each other....

The much needed clarification is welcome. The less uncertainty the better. Still, the Treasury Committee concluded in November 2011 that a non-renewable term of 8 years for the post of Governor was appropriate. The Government agreed, and changed the law in the Financial Services Act 2012, in line with the recommendation.

In making this announcement, the Government and the Governor are sticking neither to the timetable set out in the exchange of letters, nor returning to the statute. More uncertainty needs to be avoided. So the decision requires a good deal of examination and explanation, which the Committee will seek when it next sees the Governor in a fortnight.

Updated

The CBI’s principal economist, Alpesh Paleja, says Carney has given us a Halloween treat:

Sorrell: Carney may be hurt by unjustified criticism

Sir Martin Sorrell

Sir Martin Sorrell, head of advertising giant WPP, is disappointed that Carney won’t stay on until 2021.

Sorrell told Sky News that “one year is better than nothing... but it’s disappointing that he won’t serve his full term.”

“Maybe he was a little bit bruised by the criticism, I think unjustified criticism, that he’s been subjected to,” Sorrell said.

Sorrell also warned that it will be “touch and go” as to whether the UK has finished the Brexit negotiations by June 2019.

Updated

Chris Chapman, a London-based trader at Manulife Asset Management, has told Bloomberg that the City ought to welcome Carney’s decision:

“Carney is a respected central banker and overall I’d say that him staying with the BOE until 2019 would be seen as a positive for the country, but again, near term there are so many other factors weighing on the pound.

Grant Lewis, head of research at Daiwa Capital Markets, tweets that Mark Carney is doing Britain a favour:

While James Mackintosh of the Wall Street Journal says Carney’s departure is well-timed.

Pound strengthens after Carney announcement

Sterling has rallied a little following Mark Carney’s announcement.

The pound is up half a cent against the US dollar at $1.224.

It’s up a similar amount against the euro, at €1.115.

These are small gains, but not enough to stop sterling being the worst-performing major currency this month [it lost 6% in October, after Theresa May announced she would trigger article 50 by March 2017, and prioritise migration control]

The pound vs the US dollar today
The pound vs the US dollar today Photograph: Thomson Reuters

Updated

Ed Conway is two steps ahead of us in the game of fantasy central bank governors:

Carney to stay until 2019 - instant reaction

Sky News’s Dharshini David says Carney has made a sensible decision by staying on for an extra 12 months.

Kate Devlin of The Herald points out that Downing Street’s charm offensive this morning didn’t persuade Carney to do three more years:

ITV’s Chris Ship wonders if Mark Carney has half an eye on Canadian politics....

Mark Carney has surprised pretty much everyone by deciding that he’ll hang around at the Bank of England for another 12 months, until June 2019.

It feels like a halfway-house decision, which will disappoint those who hoped he’d stay until 2012.

But it may also placate some of his Brexit-supporting critics; as Carney will depart shortly after Britain’s exit from the EU is completed (assuming Theresa May starts the process in March 2017, as planned).

Philip Hammond has sent a rather short reply to Mark Carney.

In it, the chancellor says he is “very pleased” that he will continue as Bank of England governor until June 2019, to provide “highly effective leadership” during this critical time.

Philip Hammond's letter to carney

Read Mark Carney's letter

Here’s the full letter which Mark Carney sent to chancellor Philip Hammond tonight, saying he would be “honoured to extend my time of service as Governor for an additional year to the end of June 2019.”

Mark Carney’s letter
Mark Carney’s letter Photograph: Bank of England

CARNEY ANNOUNCEMENT: GOVERNOR TO SERVE EXTRA YEAR

Governor of the Bank of England Mark Carney leaving Downing Street this afternoon.
Governor of the Bank of England Mark Carney leaving Downing Street this afternoon. Photograph: Daniel Leal-Olivas/AFP/Getty Images

BREAKING NEWS: Mark Carney has decided to staying on as Bank of England governor for another year.

The Bank of England has just announced that Carney will remain in post until the end of June 2019, 12 months longer than originally planned.

But crucially, Carney is not taking up the option of three more years -- despite Theresa May’s vote of confidence today.

Carney says this extra 12 months should cover the period over which Britain leaves the European Union, and will help “secure an orderly transition” to the UK’s new relationship with Europe.

More to follow!

If you’re just tuning in, I’d better explain that the question on the City of London’s collective mind is whether Mark Carney decides to stay on at the Bank of England until 2021.

Under his original contract, he is due to leave in the summer of 2018, but he has the option to stick in the job for another three years.

Some pro-Brexit politicians have heaped heavy criticism on Carney, saying he was discredited for being unduly pessimistic about leaving the EU.

But earlier today, Theresa May’s spokeswoman gave him a resounding endorsement, saying:

“It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years.

The PM has always had a good working relationship with the governor of the Bank of England and intends to continue that.”

Carney and May then spoke for around an hour and a half today.

Decision could come shortly....

We’re also hearing that a decision on Mark Carney’s future could come this evening....

Updated

Investors would probably be reassured if Mark Carney announces he’ll stay at the Bank of England for another three years.

This is from Reuters’ latest update on the governor:

The career plans of a man once dubbed the “outstanding central banker of his generation” have gripped financial markets. Some of the recent slide in sterling and rise in government bond yields have been attributed by analysts to the prospect of Carney leaving the BoE.

“If Carney was to stay until 2021 that would somewhat reassure markets,” said Hetal Mehta, senior European economist with Legal & General Investment Management.

“It would be really unwelcome for (finance minister) Philip Hammond to have to find someone new over the course of next year when he will have a million and one other things to worry about.”

While we wait for developments, here’s a video clip of Mark Carney responding to an MP’s question:

Danny Blanchflower, a former Bank of England policymaker, has warned that Mark Carney is the main defence between Britain and chaos.

Writing in the Guardian tonight, Blanchflower says:

Mark Carney is unequivocally not responsible for the slowing of the UK economy or the fall in the pound. Quite the contrary, he almost single-handedly turned around a potential collapse in output and sentiment in the days after the EU referendum on 23 June. Far from harming Britain, Carney has been the country’s saviour.

I have criticised the Bank of England governor rather harshly in the past, especially for his claim in August 2015, that “sustained momentum” in the UK economy and rising inflation would “likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”.

That didn’t happen. But I have changed my mind. Right now we all need to stand behind Carney for the good of the country. Without him, chaos reigns.

Here’s the full piece.

We could get an announcement from the Bank of England tonight, according to Jason Groves of the Daily Mail.

That’s not official, though -- so hopefully it won’t interfere with anyone’s trick or treating....

Over at the Oxford Union, the US treasury secretary is educating students about the problems in the global economy.

Jack Lew is running through a familiar litany of problems -- from corporate tax avoidance to worries about migration, and the rise of popularism among those who feel they’re getting an unfair deal.

Our economics reporter Katie Allen is tweeting the key points:

Hopefully one of the students will ask Lew why the government he’s served in hasn’t managed to tackle these problems...

Updated

That ‘pop’ in the pound a few minutes ago may simply be due to trading around the 4pm fix - when the value of the pound is recorded each day, City traders tell me.

Today’s fix may be more volatile as it is the final reading of the month, so investors may be rebalancing their portfolios.

Here’s an explanation of The Fix.

Updated

Here’s the official (no) comment from Downing Street about today’s meeting between Theresa May and Mark Carney.

“This was a scheduled, planned meeting that had been in the diary for a while.

I’m not going to go into the details of the discussions.”

Curiously, the pound just jumped by half a cent against the US dollar, to $1.2217.

It’s also up half a percent against the euro, to €1.114.

It’s not clear what sparked this mini rally, or whether it will last.

Updated

Theresa May’s spokeswoman won’t say how the meeting with Mark Carney went, alas.

The long-term value of the pound will be determined by the terms of Britain’s exit from the EU and the trade deals it secures, not the identity of the Bank of England governor.

So argues Neil Wilson of City trading firm ETX Capital, who says Carney’s future shouldn’t distract from the fundamental issues affecting the UK economy.

He writes:

Investors are selling the pound for a variety of reasons and the whole Carney saga doesn’t amount to a hill of beans for the currency....

Sterling was the worst performing currency in October, having had its worst month since June, which has more to do with ‘hard Brexit’ talk since the Tory party conference than speculation over Mr Carney’s future.

For sterling what really matters is how Britain handles the Brexit process and what direction Theresa May and co plan to take the country in the coming months before invoking Article 50. The chief drivers of the pound value now are political, not which city Mr Carney chooses to live in. (Also if the economy continues to hold up well into next year we could see sterling crank higher.)

And while Mr Carney provides continuity and reassurance, it’s hard to see him doing an awful lot between now and 2018 that would be different to any other central banker.”

Updated

Even the satirists are having their say:

Unless we get a late rally tonight, the pound is going to rack up its worst month since June - having dropped by over 6% in October.

Philip Shaw, chief economist at Investec, says the uncertainty over Mark Carney’s future has weighed on sterling.

“The talk of Carney not taking up the extra three years after 2018 has rattled investors in what is a very uncertain outlook.

Until his decision to stay on is formally acknowledged,markets are correct in treating the situation as uncertain.”

Carney also waved what looked like an A4 leather binder towards the press pack as he exited Number 10 a few minutes ago:

Governor of the Bank of England Mark Carney leaves 10 Downing Street in central London on October 31, 2016. British Prime Minister Theresa May on October 31 threw her weight behind Bank of England governor Mark Carney, who faces intense speculation over his future. / AFP PHOTO / Daniel Leal-OlivasDANIEL LEAL-OLIVAS/AFP/Getty Images

Updated

Photos: Carney leaves Downing Street

Here you go -- photos of Mark Carney leaving his meeting with Theresa May - with a shy smile for the cameras (but no words, alas)

Bank of England governor Mark Carney leaving Downing Street.
Bank of England governor Mark Carney leaving Downing Street. Photograph: Nick Ansell/PA
Governor of the Bank of England Mark Carney leaves 10 Downing Street in central London on October 31, 2016.

Mark Carney has just left his meeting with Theresa May, according to Sky’s Ed Conway.

No news on his future yet, though....

Mark Carney hasn’t been slack at the BoE. Since joining in summer 2013 he’s:

  • Launched a new policy of ‘forward guidance’ on interest rates, changed it, and now put it on the backburner while Brexit plays out.
  • Kept interest rates on record lows for years, and then cut them to just 0.25% after the referendum
  • Shaken up the Bank of England, by holding open days for the public to have their say
  • Launched Britain’s first plastic banknotes (and dipped one in a pot of curry]
  • Made a series of warnings about the dangers of Brexit before June 23, and had to justify them ever since.

Our timeline has the full story:

Mark Carney has long been rumoured to fancy a career in politics. And recent events suggests he may have a fine grasp of the dark arts of political spin.

The Telegraph’s James Kirkup argues that Carney has played a blinder this month, by using the attacks from Brexit supporters to spark a debate about his future.

The key to the saga is Carney’s declaration last week that his decision on whether to stay or go in 2018 was “entirely personal”. That sent the hare running.... and it got a second burst of speed when various Carney ‘friends’ suggested he was leaning towards a return to Canada.

Kirkup explains how Carney outfoxed his detractors within Theresa May’s government:

Before the row over his ideological commitment to Brexit blew up, there was a perfectly respectable question to be asked about Mr Carney’s future based on his competence as a central banker. Some of his policies, especially “forward guidance” about rates, have been less than impressive, leading to confusion instead of the clarity he promised.

But the Carney-bashers have allowed that debate to shift from economics into politics, an arena where Mr Carney does rather well. He understood that Mrs May could not afford to have markets and investors (and even some voters) see Brexit Britain as the sort of country where the central bank governor can be purged for failing to pass a political purity test.

Simply, it might (just) have been viable to let Mr Carney go for being incompetent, but it wasn’t sensible to do so for reasons of politics. The Governor saw that and upped the ante accordingly: he could afford to walk away; could Britain afford to have him go?

Here’s our latest news story on Mark Carney’s future, by economics editor Larry Elliott:

A quick catch-up

Right, let’s quickly recap before Mark Carney emerges from his meeting at Number 10 Downing Street.

The future of Britain’s central bank chief could be decided soon, following a weekend of speculation that has gripped the City.

Mark Carney is meeting with Theresa May now, less than a day after the Financial Times reported that he was ready to serve another three years as Bank of England governor.

Theresa May’s spokeswoman has already signalled that the government backs Carney, following several days of criticism from politicians who campaigned for Brexit.

The spokeswoman said that Carney was “absolutely” the right man to run the BoE, saying:

The PM has been clear in her support for the governor, the work he is doing for the country. It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years.

The PM has always had a good working relationship with the governor of the Bank of England and intends to continue that.

As things stand, Carney’s current contract expires in the summer of 2018, but he has the option of a three-year extension.

A string of City investors and economists have argued that Carney should stay on, to provide stability at this time.

Prominent voices today include Hendrik Du Toit, the chief executive of Investec Asset Management, former BoE policymaker Adam Posen, and Lothar Mentel, CIO of Tatton Investment Management.

But Carney’s critics insist that the governor’s reputation has been damaged by his comments in the run-up to June’s referendum, and his actions since.

Daniel Hannan, the MEP who played a key role making Brexit a reality, said Carney has made mistakes at the Bank - and needed to stop acting like a politician.

He told the Today Programme that:

If he does stay, it’s on the basis that he’s not the rockstar banker who presumes to tell Scotland how to vote, and [instead he] stays narrowly to his brief.

Two Conservative MPs, Nicholas Soames and Anna Soubry, also publicly backed Carney this morning.

But the pound remains under pressure, and is now down 0.2% at $1.216. Traders say that the criticism of Carney may have undermined the Bank of England’s independence, even if he does decide to stay on until 2021.

Updated

Carney arrives for talks with May

Mark Carney has arrived at Downing Street, and is meeting with Theresa May right now... just a couple of hours after the PM offered the governor her full support.

Could an announcement on his future come today?....

Bank of England governor Mark Carney arrives at Number 10 Downing Street in central London, Britain October 31, 2016.
Bank of England governor Mark Carney arrives at Number 10 Downing Street in central London, Britain October 31, 2016. Photograph: Stefan Wermuth/Reuters
Bank of England governor Mark Carney arrives at Number 10 Downing Street in central London.

This uncertainty over Mark Carney’s future has come at a bad time, says Costas Milas, professor of finance at the University of Liverpool, in a new blog post.

With Britain probably entering a “increasing economic uncertainty”, the governor needs to reassure himself that he has Downing Street’s full support, before deciding whether to extend his tenure until 2012.

Milas writes:

One of the unwritten rules of football is never substitute a player – let alone your captain – when defending a corner. Indeed, with Brexit headwinds moving fast(?) our way, this is not the time to replace the Governor.

Mark Carney himself should seek reassurances of no further ‘foul play’ by the government so that he confirms his Governorship until 2021. Unless, of course, government officials have already found a ‘suitable’ replacement.

But then again, would another candidate be willing to risk their reputation on such a demanding job knowing, or at least suspecting, that their predecessor decided to step down partly because of rising tensions and/or interference by government officials?

The pound continues to dip, and is now down 0.2% today at $1.215.

October really has been a rough month for sterling. It ended September worth nearly $1.30, but began sliding once Theresa May indicated Britain was heading for a hard Brexit.

The pound has now lost over 6.3% during the month, making it the worst performing currency...

BAML: The damage is done....

Analysts at Bank of America Merrill Lynch fear that the row over Mark Carney’s future may have caused long-term damage to Britain’s reputation in the markets.

They suspect international investors may still be wary of UK assets, even if the governor announces he’ll stay on until 2021.

They say:

At this stage we are not sure even Carney extending his contract would eliminate the extra policy uncertainty: it may be tricky to undo the impression markets have already formed.

That’s via fastFT:

You might expect the pound to have rallied on the back of Theresa May’s show of support for Mark Carney.

But actually, sterling is still flat today at $1.2170.

I don’t think that means traders aren’t interested in who runs the Bank of England, though.

Instead, they’re probably waiting for firm news, and also a little alarmed that an independent central bank governor could have faced a campaign to drive him out.

With Theresa May’s vote of confidence in the bag, could Mark Carney announce later today that he’d like to serve a full term at the Bank of England?

Sam Coates of The Times reckons the story could now move fast....

The BBC’s Laura Kuenssberg reports that Mark Carney is due to meet the prime minister today, but it’s been in the diary for a while.....

Theresa May has just slapped down critics of Mark Carney, such as Dan Hannan, says the Sun’s political editor Tom Newton Dunn:

Theresa May: Carney's the best man for the job

Newsflash from Downing Street: Theresa May’s spokeswoman has just given Mark Carney a resounding vote of confidence.

The Prime minister’s spokeswoman has told Westminster reporters that May is ‘clear in her support’ for governor Carney, and the work he is doing for the country.

And May would also support Carney if he decided to extend his original contract, and stay at the BoE until 2021 (rather than leaving in 2018, as originally planned). But the governor must decide if he wants to do an extra three years.

The spokeswoman says:

The PM has been clear in her support for the governor, the work he is doing for the country. It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years.

The PM has always had a good working relationship with the governor of the Bank of England and intends to continue that.

ITV’s Chris Ship tweets from the Lobby:

And asked if Carney was the best man for the job, the spokeswoman said: “Absolutely.”

Huffington Post’s Paul Waugh says it’s a significant intervention (following weekend reports that Carney might announce his departure date this week).

Updated

Political and economic journalist Iain Martin has written a good piece about the Carney saga.

He points out that our governor is not above criticism. Carney can appear somewhat thin-skinned when his judgement is questioned (a not-uncommon Achilles heel among central bankers, frankly).

But still – undermining the Bank of England governor is a serious business. Especially when we’ve also seen cabinet leaks undermining chancellor Philip Hammond (for being too pessimistic about Brexit).

Martin says this is the equivalent of playing with matches in a petrol station, at a time when the government should be reassuring the financial markets:

We’re in ravens at the Tower of London territory here with Carney and Hammond. What they symbolise via the authority of their respective offices is stability, relative calm and continuity. Perception and confidence matters, a lot.

Tories used to have a better feel for the realities of markets, back when many of them had worked in the City. Now, they seem to think a war on Carney is simply an extension of the Brexit campaign. It is to his credit if he has decided to leave this recent mess in the past and get on with helping guide Britain through Brexit.

US Treasury secretary: Better to have 'smooth' Brexit

United States Secretary of the Treasury Jack Lew.

Just in... America’s Treasury Secretary has met with top bankers in London, and told them the US hopes to see a ‘smooth’ Brexit process.

Jack Lew also argued that politicians need to use government spending (fiscal policy) to boost growth, rather than simply relying on loose monetary policy (low interest rates).

Here’s the official ‘readout’ from the US Treasury office.

During the conversation, Secretary Lew underscored the United States is committed to continuing to work with the UK and the EU to ensure sustained economic stability and shared, global prosperity as the UK and the EU negotiate their future economic relationship. The Secretary reiterated that a transparent, smooth and cooperative process that results in a highly integrated economic relationship is in the best interests of Europe, the United States, and the global economy. Secretary Lew added that the United States remains committed to maintaining its Special Relationship with the UK and its strong partnership with the EU.

Secretary Lew noted that U.S. economic growth remains solid in the face of headwinds from the global economy. The Secretary added that, looking forward, it is important that leaders make robust use of all policy levers –monetary, fiscal, and structural – to achieve strong, sustainable, and balanced growth and to ensure that the benefits of growth are shared inclusively within countries.

Lew met with Jes Staley (CEO of Barclays), Bill Winters (CEO of Standard Chartered), Xavier Rolet (CEO of the London Stock Exchange), James Cowles (EMEA chief at Citigroup), Mark Gavin (European chairman of JPMorganChase), and Gary Campkin (director of TheCityUK).

Mark Carney’s future is becoming a litmus test of the Bank of England’s independence, says the Reuters Breaking Views team:

Back in 2012, chancellor George Osborne described Mark Carney as “the outstanding central banker of his generation”, as he announced his appointment to the Bank of England.

Historians may make a stronger case for the ECB’s Mario Draghi (who also has a habit of upsetting politicians), but at the time, Carney’s appointment was pretty well received.

Indeed, even arch-critic Dan Hannan hailed the move on Twitter:....

Posen: Central bank independence under threat

US economist Adam Posen fears that the attacks on Mark Carney will damage the whole concept of Bank of England independence:

He tweets:

Posen is a former member of the Bank of England’s monetary policy committee, who now runs the Peterson Institute for International Economics.

Newsflash: The eurozone economy grew by 0.3% in the third quarter of 2016.

That’s in line with forecasts, and matches the 0.3% growth in the April-to-June quarter.

European politicians will be pleased that growth didn’t weaken following the UK’s brexit vote. But it’s still a lacklustre recovery; too slow to drag down the unemployment total.

UK mortgage approvals hit highest since Brexit vote

Just in! The number of mortgages approved by UK banks has jumped to their highest level since the EU referendum.

Mortgage approvals for house purchases rose to 62,932 in September from 60,984 in August, according to new data from the Bank of England. That’s the highest since June, beating City forecasts of a decline to 60,150.

It’s the latest sign that Britain’s economy isn’t falling into recession, following last week’s GDP figures (which showed growth of 0.5% in the last quarter).

Mark Carney’s supporters could argue that this vindicates his decision to ease monetary policy after the referendum.

His opponents, though, could claim that it simply shows he was simply too alarmist and pessimistic about Brexit.

Without a ‘counterfactual’ (an alternative universe where Carney takes a monastic silence in the run-up to the vote, and cowers in his office afterwards), we’ll never know for sure....

Updated

Kit Juckes, currency expert at French bank Societe Generale, says the speculation that Carney would extend his term until 2021 is preventing the pound sliding today.

The FT reports that BOE Governor Mark Carney has told friends he is planning to stay on for his full term. That’s stopped the rot for sterling, for now.

Hendrik Du Toit, the chief executive of Investec Asset Management, has just thrown his weight behind the governor:

The speculation over Mark Carney’s future began nearly four weeks ago, when prime minister Theresa May criticised the Bank for keeping interest rates so low.

That intervention, during May’s speech to her party conference, appears to have opened the door for Brexit supporters to take a pop at the governor.

Marc Ostwald of ADM Investor Services argues that the spat doesn’t reflect well on the government:

The stench of UK Conservative Party internecine warfare hangs over Bank of England governor Carney, serving as a reminder why Mrs May once called the Conservative Party the ‘nasty’ party.

Economist Vicky Pryce, of the Centre for Economics and Business Research, has also defended Carney, arguing that his critics are effectively “criticising the Bank’s independence.”

She reminded the Today Programme that the BoE helped to stabilise the economy after the EU referendum:

“Mark Carney was absolutely right to be prepared to do something about Brexit.

The economy wouldn’t be growing anything like as fast as it is if it wasn’t for his very immediate intervention in the markets.”

(that’s via the Independent)

Reminder: the Bank of England provided more liquidity to banks in June, and then cut interest rates and boosted QE in August.

Nicholas Soames MP and Anna Soubry MP back Carney

Two Conservative MPs have rallied to Mark Carney’s side.

Sir Nicholas Soames hit out at the governor’s critics, such as Dan Hannan, accusing them of undermining the UK.

Soames also tweeted yesterday:

Fellow Tory Anna Soubry has also criticised Hannan this morning, over his comments on Radio Four today.

Hannan: Carney needs to stop being a rockstar central banker

Daniel Hannan.

Dan Hannan MEP, one of Mark Carney’s most robust critics, says the governor needs to behave better if he stays on at the Bank of England.

He was speaking on that Today Programme this morning.

Q: What would you say to Carney, as he decides whether to leave in 2018 or stay until 2021?

I’d say that if you do stay, it’s important to comport yourself as a quiet and discreet public servant who errs on the side of saying too little.

Q: But you’d like him to resign?

Umm. It’s up to him. But if he does stay, it’s on the basis that he’s not the rockstar banker who presumes to tell Scotland how to vote, and [instead he] stays narrowly to his brief.

Hannan then argues that Carney has brought the current spat on himself, by violating the independence of the BoE.

If you’re going to engage in straight-forward political argument, and have views that eerily echo the chancellor who appointed you, you can’t then argue if you get criticised.

Hannan claims his criticism isn’t personal - saying Carney did a ‘pretty good job’ when he was governor of the Bank of Canada.

But then he puts the knife in, saying:

As a matter of observable fact, he has tended to get things wrong.

He cites Carney’s famous ‘forward guidance’, when he said he’d consider raising interest rates when unemployment fell to 7%, then when real wages started to rise, but he never did.’

He said during the campaign that if we voted leave, unemployment would rise and the economy would stall

As a matter of observable fact, unemployment has fallen since the vote and the economy expanded by 0.5% since the vote.

Updated

Sir Martin Sorrell

Sir Martin Sorrell, the boss of advertising giant WPP, has revealed he wants Mark Carney to remain at the BoE.

He told the BBC Breakfast that the governor has handled the aftermath of the EU referendum well:

If Mark Carney stays as Bank of England governor, which I really hope he will do, that will help. His prompt action post the Brexit vote I think softened the blow of Brexit.

Updated

Britain’s FTSE 100 index of leading shares has dipped in early trading, down 25 points at 6972.

There’s nervousness ahead of the US presidential election, especially given the new FBI inquiry into Hillary Clinton’s emails, as well as chatter about Mark Carney.

And the oil price is also down, with Brent crude dropping 0.5% to $49.53 after a group of non-Opec members didn’t agree any production cuts at a weekend meeting.

Updated

Kathleen Brooks: Pound would rally if Carney stays on

Kathleen Brooks

Sterling could strengthen if Mark Carney commits to serve a full eight year term at the Bank of England, says Kathleen Brooks, research director at City Index

She says:

The US election saga has been garnering all of the headlines this weekend until one popped up from the FT, which is reporting that Mark Carney is willing to serve an 8-year term at the BOE. This is big news for UK assets, the pound had a mini pop higher during the Asian session, but there could be more to come.

If this story is true, then it is a beacon of stability during a period of uncertainty for the UK economy, which should benefit the currency and stocks alike.

Brooks reckons the pound could rally back toward $1.25.

But she also reminds us that Carney was once dubbed an ‘unreliable boyfriend’, after rejigging his ‘forward guidance’ on when he’d raise interest rates.

We need confirmation from the BOE that he is staying before we get too giddy with excitement that the “unreliable boyfriend” has finally committed to the Old Lady*.

* - that’s the ‘Old Lady of Threadneedle Street’; an old nickname for the BoE

Updated

The pound jumped back over the $1.22 mark overnight after the Financial Times reported that Mark Carney was ‘ready to serve’ until 2021.

It’s now dipped a little, to around $1.219, as investors await fresh developments.

IHS’s chief economist, Howard Archer, believes Carney needs to put an end to this speculation soon:

The Daily Telegraph’s international business editor, Ambrose Evans-Pritchard, argues that Britain needs Mark Carney right now:

Kleinwort Benson’s chief investment officer, Mouhammed Choukeir, also believes the City wouldn’t be happy if governor Carney quit in 2018.

He tells Bloomberg TV that:

If Carney were to leave right now, it would add another level of uncertainty….which the market is trying to avoid right now.

Q: But hasn’t Carney’s credibility been damaged by his warnings ahead of the Brexit vote?

Choukeir argues that Carney was actually doing the ‘prudent’ thing, but this has now turned into a political debate.

Lothar Mentel, CIO of Tatton Investment Management,

Lothar Mentel, CIO of Tatton Investment Management, says investors would be very concerned if Mark Carney chooses to leave the Bank of England in 2018.

Carney is one of the “stabilising factors” we have in the UK, Mentel tells Bloomberg TV.

He thinks the City would be reassured if the governor chooses to extend his term by three years, to 2021.

Mentel says:

If he decided to go that would be a very, very strong signal that there is not enough support from politicians....

I think the markets would take it quite negatively

Mentel adds that the pound could take ‘another leg down’, and suffer new losses if Carney chose to walk away in two years.

Updated

Carney: Will he stay or will he go?

There’s one main topic of conversation in the foggy streets of the City this morning; is Mark Carney going to be driven out by his opponents in the pro-Brexit camp?

Yesterday, several UK newspapers reported that Carney was poised to turn down the option of staying at the Bank of England until 2021. Instead, he would simply leave the governorship in summer 2018, when his current five-year term ends.

The Sunday Times, for example, declared that:

Mark Carney may announce within days that he is to quit his job as governor of the Bank of England amid signs he has become a controversial figure in the post-Brexit debate.

Senior City figures who know the governor said they believed it was more likely than not that he would choose to return to Canada in 2018, adding that his family’s feelings were a concern.

He has the option of leaving five years after his appointment, which was in July 2013, or staying for the full eight-year term. Suggestions that he could leave before 2018 were firmly rejected.

Earlier this year, Carney suggested he could well stay on until 2021. But since then, he has faced steady, rising criticism from the Leave campaign, following his pre-referendum warnings that a Brexit vote could push the UK into an immediate recession.

MEP Daniel Hannan, for example, argues that Carney should quit for having politicised the governorship. Conservative MP Jacob Rees-Mogg and former chancellor Lord Lawson have also criticised him.

But late last night, the Financial Times dramatically reported that Carney was “ready to serve” a full eight-year term (assuming the government want him to, of course).

The FT’s Chris Giles says:

Mr Carney is said to be leaning strongly towards staying in his post. He would like to help steer the UK economy through treacherous waters once the government triggers Article 50 in March 2017, starting a two-year clock on divorce negotiations with Brussels.

“Mid-2018 could be the darkest days for the UK,” said a person familiar with the governor’s thinking.

The issue is likely to dominate this week, as the Bank of England is presenting its quarterly inflation report on Thursday. Carney’s press conference, at 12.30pm, will be unmissable...

Updated

The agenda: German retail sales slide ahead of eurozone GDP

Berlin, Germany.
Berlin, Germany. Photograph: Alamy

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The new week has started with some bad economic news from Germany.

German retail sales have fallen at their fastest pace in two years, suggesting that consumer confidence in Europe’s largest economy may be weakening.

Retail sales slid by 1.4% in September, missing expectations of a 0.2% rise. That’s a worrying sign, with Brexit continuing to cast a shadow over Europe.

These retail sales figure can be volatile. But Naeem Aslam, chief market analyst at Think Markets, thinks we should be concerned:

The sentiment is very negative over in Europe and the economic data out of Germany made things even more worse. The retail sales data out of Germany was well below the expectations raising concerns about the domestic growth in the country.

The retail sales data always tells us the story about the health of the economy

That sets the scene for the main event of the morning; the eurozone GDP reading for the third quarter of 2016. It’s due at 10am.

Economists expect quarterly growth of 0.3%, which would count as ‘steady but unspectacular’. On Friday, we learned that France only grew by 0.2%, while Spain looked healthier with 0.7% growth.

On the corporate front, advertising group WPP is reporting results.

We’ll be tracking all the main events through the day...

Updated

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