Carney confirmed as next Bank of England governor after grilling
Published Thursday, February 7, 2013 6:09AM EST
Last Updated Thursday, February 7, 2013 11:25PM EST
Outgoing Bank of Canada Governor Mark Carney has been confirmed as having the top job at the Bank of England after he was grilled by British lawmakers Thursday about why he decided to seek the position in the U.K.
Carney appeared before the U.K. Treasury Select Committee in London, hours before they confirmed his position.
Carney said it was primarily Chancellor of the Exchequer George Osborne's suggestion he could serve a five-year term instead of the standard eight years, and the difference that would make in the life of his young family.
The Canadian said his eldest daughter would just be finishing high school at the end of a five-year term, and his younger daughter would still have two years to re-integrate back into the Canadian French high school system by then.
"Given it's a personal decision it may not seem so decisive, but actually for me, given the timeline, given the ages of my children, it actually makes a material difference to come here and return to Canada," Carney told the committee.
Carney was also asked whether he had political ambitions -- a topic of widespread speculation in Canada ever since he was approached to run for the leadership of the Liberal party, and vacationed with the Liberal finance critic last summer.
If he had any such ambitions, Carney replied, he would be pursuing them in Canada, not moving to England to take on one of the toughest bank jobs in the world.
Carney was also questioned about how we was recruited for the job, and how he felt about special conditions that were arranged to allow him to apply for the position a full month after the deadline had passed.
He replied that even though the deadline had already closed when he was approached by Osborne in November 2012, he was asked the same questions as all the other candidates and felt the process was fair.
The substantial pay package being provided to Carney was also the subject of discussion. He will receive 800,000 pounds ($1.24 million) per year in salary and perks, in addition to a housing allowance worth the equivalent of $390,000 per year.
He was asked whether "he would have done the job for less."
"Those were the terms I was offered and I accepted them," Carney replied, adding that the housing allowance was appropriate given the cost difference between Ottawa and London.
"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," he said.
Carney was also asked whether he thought there would be "resentment" among Bank of England staff about his salary, given the fact pay rates at the central bank have been frozen for two years.
He responded that although his salary is higher than that of outgoing governor Sir Mervyn King, who is paid the equivalent of $475,845 per year, the salaries are comparable when King's pension is factored in. Carney will not receive a pension as part of his pay package.
He added that his pay package is in line with other central banks around the world.
Open to a review
Carney said he is open to a review of Britain's monetary policy framework, suggesting a more growth-oriented approach is possible under his leadership.
However, he said any move to change the current regime -- which sets interest rates with the goal of achieving target inflation rates of 2 per cent -- would only come after thorough review. The U.S. Federal Reserve, by contrast, is also responsible for economic growth.
"The flexible inflation-targeting framework should remain broadly in place, but details need to be reviewed and could be changed," Carney said.