James Ashton: One year in, Governor Mark Carney is human after all

Sometimes you wonder whether he has the time to fit all of this in. Monetary Policy Committee meetings, where the crucial business of interest-rate setting takes place, have been squeezed from two days to one so the Governor can go off to fulfil international duties.

And then there is his image: so smooth as to have converted a legion of female fans to the intricacies of monetary policy; cool enough for him not to look out of place strolling through the crowds of the Wilderness Festival in Oxfordshire with his wife Diana.

It seems as though Carney doesn’t much like his transition from the financial pages to the social pages, but nor has he gone out of his way to play down the “George Clooney of central banking” tag. His people could have avoided an appearance on the BBC’s Andrew Marr show on the same day as the movie star if they had wanted to. By introducing Nespresso, the coffee that Clooney famously promotes, to the Bank, he was just asking for trouble.

When he swept in, Carney assumed more power than any previous incumbent, as banking supervision returned from the defunct Financial Services Authority and new responsibilities for financial stability, managing mortgage lending limits and fostering the country’s economic health were added.

While he has begun to wield some of those — capping lending criteria to prevent buyers from overstretching themselves in a hot property market — he has been at pains to point out what he can’t do just as much as what he can.

So when the Bank was linked to the escalating scandal over the manipulation of foreign exchange markets, Carney swore he would get to the bottom of it to protect integrity. But he did so by adding a fourth deputy to the ranks, Minouche Shafik, who will look after markets and banking.

And there have been interesting exchanges between Carney and Osborne on the issue of soaring house prices. The Governor said that he won’t raise interest rates specifically to cool the market, nor can he build more properties to tackle the supply shortage. The Chancellor said the Bank has all the tools at its disposal to sort out the problem. Far be it for them to appear to be in lockstep all the time — this is not the Ken Clarke and Eddie George show for the 21st century.

Of greater concern was Carney’s flagship policy of forward guidance, designed to add clarity for homes and businesses planning for movements in interest rates. No sooner was a target of reducing unemployment to seven per cent set as a trigger for examining an interest-rate rise than it was abandoned because it looked as though it would be met too early.

Replacing that with the more nebulous metric of monitoring the level of spare capacity in the labour market rumpled brows. In mid-May, Carney then dashed hopes of an early interest rate rise, when markets had been expecting one, only to change tack a month later at the Mansion House dinner, causing sterling to yo-yo. No wonder he was labelled an “unreliable boyfriend” in front of the Treasury Select Committee for blowing hot and cold.

Surely it should have been easier than this to manage rates, when, from historic lows, the only way is up. Whatever package they come in, central bankers by necessity have to weigh every word and weave and duck for fear of being pinned to a single course of action.

Don’t get me wrong: Carney is undeniably a good thing for the capital and the British economy at large. At his best, the clarion call for the “famous and fortunate” to adopt higher ethical standards at the Inclusive Capitalism conference hinted at the man behind the central banker.

His predecessor Lord King’s Wimbledon analogy still holds: world-class players are drawn to London, whether that is to SW19 or EC2. But Carney’s secret was going to come out sooner or later. The Governor is human after all.