When historians add up the achievements of Prime Minister Tony Blair, they may conclude that he made his smartest decision just after he came to power in 1997. That's when Blair and Chancellor of the Exchequer Gordon Brown gave up the power to set interest rates, handing it over to the Bank of England. Just about everyone thinks the independent bank has been nothing short of a smashing success.
Analysts give much of the credit for the Bank's smooth operation to Mervyn King, 56, who became the bank's Governor last summer after serving as the Deputy Governor for Monetary Policy under Eddie George. King arrived at the Bank from the London School of Economics in 1990, just two years before speculative attacks on the pound forced Britain to drop out of the European Exchange Rate Mechanism in 1992. He has devoted himself ever since to taming Britain's once notoriously volatile economy. His track record speaks for itself. Britain was just about the only major economy to escape the last recession. Unemployment, now 4.7%, is the lowest in Europe and continues to fall.
King's quarterly press conferences on the Bank's Inflation Report are like mini-economics courses. But he keeps his sense of humor. Asked whether he is happy about sterling's value, he replies: "I don't think anyone in his right mind would allow their happiness to be affected by foreign exchange rates."
King doesn't hesitate to abandon his role of good gray banker for lighter pursuits. He admits to being a near-fanatical devotee of the Aston Villa soccer team in Birmingham and sometimes entertains friends with a mock presentation of the relationship between Aston Villa's performance and that of the British economy. King says his goal is to avoid economic booms and busts and make monetary policy unexciting. That doesn't mean, of course, that he himself has to be boring.