Carney is right choice for UK, says Brazil bank chief

The head of Brazil's central bank has praised the appointment of Mark Carney as Governor of the Bank of England, saying the Canadian's global reputation meant he was the ideal man to steer the economy back into health.

Alexandre Tombini said the move will "serve the UK well", but warned that Europe's leading economies still faced significant headwinds, and dismissed any hopes of growth in the region's worst-hit countries next year.

"Mark Carney has done a great job in Canada [where he is currently the central bank's governor] and is respected across the world," he said in an interview at the Banco Central do Brasil's headquarters in Brasilia.

Asked whether George Osborne's decision to court Mr Carney for the role might compromise the Bank's independence, he added: "I think that's a question for [Mr Carney]. All I can say is that he's a very able man."

Mr Tombini said Brazil did not believe the situation in Europe was critical, but predicted that the eurozone's economy was likely to contract again next year: "The feeling we had until earlier this year was that a collapse was in the making, but that has been dissipated significantly because of all the measures that have been undertaken regarding the funding of the banking system and the refinancing of sovereigns.

"Building blocks have been put together to address our most serious concerns, but it doesn't mean that growth will be revived quickly. It will take time. The way we look at Europe when we set policy here is that the threat of a tail event has been lowered but growth will be slow."

Mr Tombini also played down fears that the looming fiscal cliff in the US could derail the global economy. He said: "There is no option other than for the fiscal cliff to be addressed. It's a US problem but also a global problem. Brazil is always preparing. We hope for the best and prepare for the worst. For the time being our view is that it's going to be addressed."

His harshest words were reserved for a US court ruling last month ordering Argentina to repay creditors who rejected the restructuring of its debt. Mr Tombini said similar rulings could hit European countries that had to restructure debts. Last week a US appeals court gave Argentina more time to fight the order. The Argentine government has vowed not to repay the so-called holdout creditors.

"This is not a good development for anyone," Mr Tombini said. "Today it is Argentina, tomorrow it could be a European country."

Is banking easier than football?

Asked whether being the head of Brazil's central bank was harder than running its football team, Mr Tombini was in no doubt. "The football team is harder," he said in a nod to Brazil's obsession with winning the World Cup being held in the country in 2014.

Brazil sacked its manager, Mano Menezes, last month, after the team's poor performances. He has been replaced by Luiz Felipe Scolari, below, returning after winning the World Cup with Brazil in 2002.

Mr Tombini became president of the Banco Central do Brasil in January 2011 and has overseen sustained growth in the world's sixth largest economy.

However figures on Friday showed third quarter output grew by only 0.6 per cent – half the rate that Mr Tombini had predicted.

Comments