Carney as Brexit weapon shows BOE’s political role


The Bank of England is getting dragged deeper into politics. Governor Mark Carney is getting it from all sides.
He’s frequently lambasted by pro-Brexit lawmakers for outlining his economic views on the nation’s departure from the European Union, and in the past month another set of lawmakers has lined him up to assess any deal reached by the UK government.
Whatever his analysis, Carney’s views will be weaponised in the vitriolic debate surrounding Brexit. Two decades after the BOE was granted operational independence — with the idea of putting interest rate-setting above the election cycle — the situation shows just how mired in politics the central bank has become.
“It’s difficult for them to give these forecasts and stay out of the firing line,” said Victoria Clarke, an economist at Investec. “You can see why they’re being asked to produce the numbers for Parliament to be able to have a debate. But they’re not going to come out of it unscathed.”
Last week, Carney agreed to a request from the Treasury Committee to provide a report on how a withdrawal agreement between the UK and the EU “would affect monetary and financial stability.” The assessment, to be delivered after a deal is agreed and before lawmakers vote on it, will include the BOE’s view on a “no deal, no transition scenario.”
That panel is now run by Nicky Morgan, a Conservative Party member who backed staying in the EU. The report is likely to reignite criticism of the BOE from Brexiteers such as Jacob Rees-Mogg, who as recently as September called Carney the “high priest of project fear.” Two years ago, a lawmaker suggested the BOE chief had stoked anti-Brexit sentiment at the behest of previous employer Goldman Sachs — a suggestion that he responded to with “wow.”
The governor has long defended the BOE’s economic forecasts ahead of the vote, which were derided as overly gloomy, and repeatedly justified the warnings with the observation that suppressing his concerns would have been a political choice.

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