The Bank, like all other central banks is trying to navigate a new financial world without either a map or very many tools in its toolbox. That some of these are problems of their own making, does not make the job any easier, especially when one then overlays it all with the unique political world that post-Brexit Britain finds itself.
In the run-up to the referendum on the UK’s membership of the European Union, current BoE governor, Mark Carney was widely criticised by the Brexit campaign for co-ordinating his message with that of the then government and pro-remain voices.
In oral evidence to the treasury Select Committee his “pro-EU” comments were accused of being “speculative and beneath the dignity of the Bank of England” by pro-Brexit committee member, Jacob Rees-Mogg.
The calls for his resignation grew louder in the wake of the Brexit mandate delivered by the vote and were intensified by the reasonable performance of the economy in the months following.
Further fuel was added to the fire by comments about savers from new Prime Minister Theresa May during the Conservative Party conference in Birmingham that were taken as criticism of the low interest rate policy pursued by the bank. Suddenly rumours started to race of a split between Downing street and Threadneedle street and, as the Financial Times characterised it, “the Brexiteers smelled blood”.
This led the Sunday papers to talk about Carney weighing up the “personal decision” of whether or not to see out his full eight-year term and on Monday and quickly following that, on Monday, the prime minister coming out in support of his continued presence at the Bank.