Mark Carney will stride into Threadneedle Street on Monday morning, the most powerful governor of the Bank of England since 1945. His responsibilities will include unprecedented regulatory and prudential authority over a global financial centre, and in his spare time he will be expected to set monetary policy for a medium sized developed economy that has gone badly off the rails. He will be the master of all he surveys.
Or not quite. One area where his authority is far from absolute is in his chairmanship of the Monetary Policy Committee. There, he has only one vote out of nine and, as the outgoing Sir Mervyn King has discovered, the other MPC members often act very independently of their leader. The system was established in 1997 with exactly that objective in mind, and it has never been changed.
This is why the markets are very uncertain what to expect from the new governor. Will he introduce a regime change, designed to transform economic expectations throughout the economy, as governor Kuroda has done in Japan? Or will he choose a less radical route, building a consensus on the MPC for a series of smaller steps over a period of months or years? Read more