By Jason Douglas and Nicholas Winning
LONDON -- Bank of England Gov. Mark Carney is to serve an extra year as head of the U.K. central bank to see the U.K. beyond its exit from the European Union, the BOE said Monday.
Mr. Carney said in a letter to Treasury chief Philip Hammond that he would be "honored" to serve as governor until June 2019.
Mr. Carney took the job in 2013 on the understanding he would serve five years of the standard eight-year term for a BOE governor. He opened the door to serving the full term -- until 2021 -- late last year, but recent clashes with Brexit-supporting lawmakers fueled speculation he might leave in mid-2018.The decision raises the prospect he will stay through the completion of negotiations to exit the European Union. Prime Minister Theresa May has said she will formally trigger Article 50 of the Lisbon Treaty by the end of March, opening a two-year window for negotiations.
"By taking my term in office beyond the expected period of the Article 50 process, this should help contribute to securing an orderly transition to the U.K.'s new relationship with Europe," he said.
Speculation over his future had reached fever-pitch in the U.K. He has faced criticism from some euroskeptics for what they consider his scaremongering about the potential costs of leaving the EU. But the central banker's supporters say his strong response to the June referendum result avoided market panic that could have endangered the world economy.
Mrs. May earlier affirmed her support for him to remain at the job for a full-term, in a rebuke to the hard-liners who want him out sooner.
"It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years," Mrs. May's spokeswoman said. "She recognizes the work that he has been doing for the country and supports that."
Asked if the prime minister thought Mr. Carney was the best man for the job, Mrs. May's spokeswoman said: "Absolutely."
The spokeswoman said Mrs. May has regular discussions with Mr. Carney. Downing Street said the two spoke Monday in a meeting that had been scheduled for some time.
Signs of possible tensions with Mrs. May surfaced after her speech at the Conservatives' party conference in early October, in which she criticized the BOE's easy-money policies. Treasury chief Philip Hammond later clarified that the government had no plans to change the BOE's inflation-fighting remit or dilute its cherished independence.
Mr. Carney, a Canadian, had told British lawmakers last week that he was still reflecting on his decision, which he called "entirely personal" because of the potential disruption to his family of serving a longer term.
Prior to the referendum, his spell in office garnered mixed reviews. One lawmaker memorably described him as "an unreliable boyfriend" following apparent pledges on interest rates that he later backed away from. But he won plaudits for his efforts to modernize the BOE and especially for his sure-footed response to the Brexit vote.
Mr. Carney and his colleagues will decide whether they need to ease policy further on Thursday, after cutting the benchmark interest rate to a new low of 0.25% and reviving a crisis-era bond-buying program in August to cushion the economy from a potential Brexit shock.
Martin Sorrell, chief executive of WPP PLC, which owns such advertising agencies as Ogilvy & Mather and Grey, said he hoped Mr. Carney would stay. "He stabilized things at a very difficult time," Mr. Sorrell said in an interview. "They were worried and concerned, but they moved very quickly to deal with it."
Write to Jason Douglas at email@example.com and Nicholas Winning at firstname.lastname@example.org
(END) Dow Jones Newswires
October 31, 2016 14:33 ET (18:33 GMT)
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