Mark Carney: Politicans attacking central banks over inequality are engaged in 'massive blame-deflection exercise'

Carney warned City firms could start leaving the UK next autumn if they do not like the shape of the Brexit deal

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The Independent Online

Bank of England Governor Mark Carney has taken aim at the critics of central bankers, saying politicans blaming the Bank's monetary policy for fuelling inequality were engaged in a "massive blame-deflection exercise".

His comments come as the US President-elect Donald Trump criticised the actions of the Federal Reserve.

Prime Minister Theresa May appeared to voice criticism of the Bank’s monetary policies during her speech at the Conservative Party Conference in October, saying it had hurt savers.

"While monetary policy – with super-low interest rates and quantitative easing – provided the necessary emergency medication after the financial crash, we have to acknowledge there have been some side effects,” Mrs May said.

Speaking in Westminster in front of the House of Commons Treasury Select Committee on Tuesday, Mr Carney responded to criticism of the negative impact of low interates rates thrown at central banks around the world.

The Governor said the increasing inequality across major economies was driven by "much more fundamental factors". Mr Carney told members of the committee: "I think it is very important to distinguish between the stance on monetary policy and the reasons why global interest rates are low, and reasons why inequality has increased across major economies".

"These are caused by much more fundamental factors and an excessive focus is, in a sense, a massive blame-deflection exercise. Curing the patient requires the operation, and monetary policy is keeping the patient alive."

During the hearing, Mr Carney also suggested that City firms could start executing plans to leave London next autumn if they are disappointed by the early shape of the Government’s Brexit deal.

He said: "If the time to exit is measured in 18 months, or less and the degree of exit is considerable, then a number of firms will take decisions."

When questioned on the recent extension of his term as Governor, Mr Carney confirmed he would leave in 2019, 12 months longer than originally planned. However, he is not taking up the option of three more years, despite a vote of confidence from Theresa May.

Mr Carney denied that his change of plans had added to the uncertainty in the economy. “There are far bigger issues adding to uncertainties in the global and UK economy,” he said.

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