The Old Lady will soon have a new man—and he’s Canadian. In the summer, Mark Carney will take over as governor of the Bank of England (also known as the Old Lady of Threadneedle Street). The current head of the Bank of Canada—and “young, good looking and charismatic,” according to outgoing governor Mervyn King—Carney is an excellent choice who will shake up the tired Old Lady’s habits. Yet precisely what his arrival will mean for UK interest rates, quantitative easing and the pound is uncertain.
One thing can be predicted: the Bank’s communication of policy will be clearer. Across the Atlantic, this has become the norm. Early in the financial crisis the Bank of Canada committed itself to low interest rates. A policy statement from April 2009, for example, said that the benchmark interest rate could “be expected to remain at its current level until the end of the second quarter of 2010.” At the US Federal Reserve, Ben Bernanke is making ever more explicit the Fed’s expectations of the economy and the likely future path of interest rates. Such clarity is the opposite of King’s studied uncertainty. “We’re in no position to make any accurate forecasts of what will happen in the UK,” King said in August.