Breaking the Bank

The exchange of letters this week between Mark Carney and Philip Hammond made it very clear who the supplicant was. The Governor of the Bank of England informed the Chancellor of the Exchequer that he was prepared to extend his term by one year. Carney pointed out that while the personal circumstances that had made him want to limit his term to five years had not changed, this country’s circumstances had. So he would be here a little longer.

Things had seemed very different a few weeks ago, when Theresa May bemoaned the consequences of the Bank’s monetary policy in her party conference speech. ‘A change has got to come,’ she had warned. ‘And we are going to deliver it.’ The Prime Minister’s willingness to criticise the effects of the Bank’s monetary policy was seen by many as threatening its independence. Carney himself was unhappy about it, and made that clear.