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Bank of England introduces long-awaited governor ahead of MPC meetings

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Bank of England introduces long-awaited governor ahead of MPC meetings

Monday marked one of the most highly anticipated days in the world of finance, as the Bank of England introduced its new Governor. Mark Carney, the former head of the Bank of Canada, assumed office this week as the first foreign Governor in the BoE’s 319-year history. Carney helped Canada become the only G7 nation to avoid bank bailouts following the 2008 financial crisis. Since then he has also helped Canada stabilize its economy amid global recession. However, Carney’s next task is no small feat. He will be relied upon to fix one of the worst recessions in UK history. His first task is to meet with the Monetary Policy Committee to discuss interest rates and the status of England’s current stimulus program.

Thursday marks Carney’s first BoE interest rate decision and asset purchase facility. Carney is a vocal supporter of monetary easing, which has created wide speculation about the future of UK monetary policy. On Thursday Carney will get to address these speculations, as well as the underlying fundamentals that have weakened confidence in Britain.

The UK economy has been mired in economic recession since the 2008 sub-prime mortgage crisis gripped the global financial markets. Since the crisis took hold, the UK has experienced high inflation, weak growth and a declining services sector. Although Thursday’s interest rate decision isn’t expected to shock the trade floor, the underlying message that comes with the announcement will be of paramount importance.

In addition to his role in shaping interest rates, Carney will also take on new responsibilities beyond those of his predecessors. He will oversee the country’s financial sector and help to determine the fate of two partly government-owned financial institutions, the Royal Bank of Scotland and Lloyds Banking Group.

Whether Carney gets to address England’s immediate problems this week is yet to be determined. We do know that the UK economy has improved slightly over the past year, which could mean less drastic measures over the short-term. To-date, the BoE has already undertaken extensive measures to keep the economy afloat, including $579 billion in stimulus over the past four years.

Carney’s first task will be to stabilize the UK economy, and nurture the almost-negligible growth rate. The UK economy expanded by a mere 0.3 percent in Q1, signalling that the worst may be behind us, but that stability remains far from reach.

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