Lamont Tells Carney to Keep Quiet on BOE RemitThomas Penny
Mark Carney, who will become governor of the Bank of England in July, should stop talking about his remit, former U.K. Chancellor of the Exchequer Norman Lamont said.
Lamont, who employed Prime Minister David Cameron as an adviser when he was chancellor in the early 1990s, said Carney should take his lead from the current chancellor, George Osborne, according to an interview in The House magazine, which is distributed to lawmakers.
“It’s curious that Governor Carney keeps saying what his remit is. I think it’s for the chancellor to say,” Lamont was cited as saying. “The bank should be independent but the chancellor decides what it is there to do. Governor Carney isn’t a man on a white horse -- nor should he be.”
Carney met the Treasury’s top civil servant, Nicholas Macpherson, last week to discuss possible changes to Britain’s monetary policy making, said a person with knowledge of the talks. The meeting came two weeks before Osborne presents his annual budget, which may be used to modify the central bank’s role in an economy facing a potential triple-dip recession.
Osborne should be cautious in changing the bank’s remit, Lamont said. The former chancellor warned his successor against replacing an inflation target with one based on growth in nominal gross domestic product.
“Inflation targeting, I think, does need modification, but I’m not in favor of some of the things that have been suggested -- having a nominal GDP target -- and I hope the chancellor will be very careful if he redefines this,” Lamont was quoted as saying. “Just as I don’t believe in deficit financing to create growth, I don’t believe that monetary activism, just printing money year after year, can get us out of recession. I would be quite concerned if we moved to a nominal GDP target.”