Bank of Canada Governor Mark Carney’s reception at the Treasury Select Committee in London today was neatly summed up by a pair of uniformed bobbies chatting outside the Thatcher Room door. “Apparently this Canadian chap is going to change the world,” said one. “Yeah,” sniffed his partner, “wouldn’t that be nice.”
The notion of Carney as an inspirational figure tasked with an exceptionally difficult job explained the prevailing mood of guarded excitement in the Thatcher Room at Westminster’s Portcullis House.
The Chancellor of the Exchequer, George Osborne, is reported to be exceptionally confident about his new appointment, thought that didn’t preclude the future Chairman of the Bank of England from enduring a several-hour-long grilling by British MPs.
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In a small hearing room packed with British and Canadian press, Carney answered four hours of questions on subjects ranging from quantitative easing to the intricacies of flexible inflation rates to whether he was actually capable of living up to his “rock star image.”
Andrew Tyrie, the Tory MP chairing the committee, opened questioning by asking Carney why he initially refused the job. The central banker’s response – that he only accepted the Chancellor’s offer when it was revised to a five-year term from eight to accommodate his daughters’ school schedules — marked him instantly as a modern man.
Tyrie, a backbench Tory with an imposing accent and a deeply self-satisfied manner laughed dismissively. “So it was your daughters who decided the matter?” he asked. Carney conceded yes it was. To which Tyrie guffawed, “Well that’s a novelty to say the least.”
In this exchange, as in the rest of the day’s questioning, Carney handled himself with characteristic unflappability. Never once did he seem rattled by the battery of occasionally heated questions about his views on fiscal policy and banking reform. His answers, which often veered deep into the intricacies of fiscal policy and process, were earnest, lucid and, for the most part, easy to understand. (He actually took the time to explain, in layman’s terms, the definition of capital ratios and liquidity requirements.)
The hearing has all but anointed Carney as Britain’s New World saviour — the man who is tasked with hauling Britain out of its triple-dip recession, seeing it safely through the eurozone crisis and the worst economic downturn since the great depression.
Indeed, while Carney seems unfazed by the scrutiny, it is in many ways an unenviable post. After one MP took him to task over his pay package (he is getting a hefty raise from his Canadian position as well as a housing allowance) another, Andrea Leadsom, came crisply to his defence. “May I say, I think you’ll be earning it. I think you’ll pay the price.”
It was a delicate moment for Carney, who’s every utterance has been pounced upon and poured over in the British press since he publically accepted the position last year. While he took great pains to point out that it’s still months away from his July start date and by that time “the UK economy might be in an entirely different place,” he did attempt to clarify his position on specific points such as inflation (he supports a continued course of “flexible regulation”) and further stimulus (he’s for it, should the British economy need it).
Most gratifying, perhaps, was the spectacle of a table full of British MPs continually referencing Canada as a shining economic model. Carney will be the first foreign head of the Bank of England and his Canadian credentials have paved the way to his historic appointment. By his own admission, he will move from one of the smallest and least expensive world capitals to one of the biggest and most expensive (hence the housing allowance) and from a reasonably healthy economy to one in a state of serious stagnation. His only worry, he said, is that “expectations have been raised so high [by the media] that they will have the pleasure of knocking them down again.”
“Perhaps,” he joked with a confident twinkle, “they’ve already done so on the basis of this testimony.” Not likely, Dr. Carney.