Mark Carney is hailed as “the outstanding banker of his generation” but has his work cut out after replacing Mervyn King.
Mark Carney has become one of the most powerful central bankers in the world after taking the reins at the Bank of England.
The Canadian has replaced Sir Mervyn King amid mounting expectation of a more activist stance towards monetary policy as the BoE looks to keep the UK recovery on track.
Hailed as the “outstanding central banker of his generation”, Mr Carney has moved from the Bank of Canada to take up the job in Britain.
The 48-year-old received a boost on his first day as figures showed the steepest surge in manufacturing activity for more than two years.
Manufacturing output hit a 25-month high of 52.5 in June, according to the Markit/CIPS purchasing managers’ index (PMI), fuelling hopes of stronger growth.
His arrival also came as the BoE revealed strong data showing British mortgage approvals rose in May to their highest level since December 2009.
Mr Carney is credited with helping the resource-rich Canadian economy recover faster from the downturn than any other developed major nation.
He has taken office amid mounting signs of economic recovery in the UK although recent official figures revealed how far Britain has to go before returning to its pre-crisis conditions.
Widespread revisions by the Office for National Statistics meant that the double-dip recession at the end of 2011 and first half of 2012 was erased from history.
However, revised data revealed that the initial recession following the financial crisis was far worse than first feared, putting the economy even further behind its pre-crisis level.
GDP is now 3.9% lower than its peak in the first quarter of 2008. Previously it was estimated to be 2.6% below.
One of Mr Carney’s first tasks is to chair the Monetary Policy Committee’s monthly meeting as it gathers on Wednesday and Thursday to decide on interest rates.
While economists are not expecting any action in July, many believe the Bank will move to cement the recovery over the next few months.
Vicky Redwood, at consultancy Capital Economics, said: “Bold action by the new governor would help to cement any recovery, but he cannot afford to be timid.”
She added: “The recent pick-up in the economic news has begged the question of whether Mr Carney actually needs to do anything any more.
“But the recent modest improvement is still far from the “escape velocity” he has said he wants to achieve.”
More on Mr Carney’s plans for monetary policy are expected from August onwards, with the possibility of introducing specific forward guidance on the cards as well as a further cash injection into the economy.
His thoughts on the economy will be outlined when he makes his debut at the inflation report news conference on August 7, his first major media appearance.
Mr Carney is the first non-British citizen to govern the Bank of England in its 319-year history.
Hand-picked by Chancellor George Osborne, he will lead an institution now responsible for financial stability and keeping Britain’s banks on an even keel – as well as its main task of monetary policy.
It was this track record which prompted Mr Osborne to overlook favourites including Bank veteran Paul Tucker and Adair Turner, the former chairman of the City watchdog.
Mr Carney, who will receive an £874,000 pay package – including a £5,000-a-week housing allowance – inherits a venerable institution which has expanded rapidly in recent years.
The Bank’s workforce has almost doubled to 3,500 from about 1,800 in 2008
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