Mark Carney faces 'mega-challenge' as Bank Governor, says former boss


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The Independent Online

Mark Carney's predecessor as governor of the Bank of Canada has warned that his former protégé faces "a mega-challenge" when he takes over the Bank of England later this year.

Mr Carney, who was grilled by the Treasury Select Committee on his plans and his £800,000 pay-and-perks package, must oversee the integration of banking supervision with the Bank of England's traditional role as the arbiter of monetary policy, such as setting interest rates.

David Dodge, who identified Mr Carney as his successor during a seven-year tenure as Canada's chief central banker to 2008, told The Independent on Sunday: " It's a mega-challenge, to absorb the regulatory side into the Bank of England. You've got to figure out how the Bank of England of 2013 operates against how it operated under Sir Mervyn King and even before that."

Sir Mervyn's final months in charge will also prove difficult. This week, the Bank's efforts to control the cost of living will come under scrutiny as its forecasts show high inflation lingering for far longer than expected.

Its latest inflation report on Wednesday comes a day after official figures are set to show its Consumer Prices Index benchmark stuck stubbornly at 2.7 per cent – the Monetary Policy Committee's target is 2 per cent. The MPC blamed the pound's fall and higher regulated prices, such as utility bills and rail fares.

Capital Economics' chief UK economist, Vicky Redwood, added that sterling's decline is likely to push up import price inflation to around 5 per cent, feeding into spiralling high-street prices next year.