Goldman Releases Its Analysis On The Appointment Of Goldman As Bank Of England Head

Tyler Durden's picture

There are so many "meta" things going on in here, we wouldn't even know where to start, so we will simply present Goldman's just released analysis of the implications of Carney's "surprise" appointment to the head of the BOE as is, in all its faux "shock" glory.

From Goldman Sachs, emphasis ours:

UK : Carney surprise choice as BoE Governor

 

Bottom line: It has been announced today that Mark Carney will succeed Mervyn King as Governor of the Bank of England from July 2013. Mr. Carney, who is currently Governor of the Bank of Canada, will serve for five years (the position is intended to be for eight years). He has a reputation for being a policy pragmatist and innovator (for instance, under his tenure, the BoC was the first G7 central bank to introduce a conditional rate commitment in 2009).

 

1. The news comes as a surprise. Although there had been some speculation that Mr. Carney might be a candidate prior to the selection process getting under way, the BoC Governor had indicated that he had not applied for the job. Of the five known candidates, Paul Tucker, one of two Deputy Governors at the BoE, was the strong favourite for the job.

 

2. It is difficult to speculate on the policy implications of an appointment such as this, not least because Mr. Carney will have only one vote (of nine) on the MPC. But the BoC Governor has a reputation for being a policy pragmatist and innovator (under his tenure, the BoC was the first G7 central bank to introduce the conditional rate commitment in 2009). Relative to the conservative approach towards credit easing that the BoE has adopted under Governor King’s stewardship, it is also possible that Governor Carney may be prepared to engage in more ‘unconventional’ forms of QE. Mr. Carney is also perceived in some quarters as being a dove, although this perception may simply be ‘state dependent’ (i.e. his relatively dovish stance reflected the weak state of the global economy during his tenure at the BoC).

 

3. In addition to chairing the MPC, the new Governor will also chair the Financial Policy Committee, with expanded responsibilities in the areas of financial regulation and oversight.

 

4. To ensure continuity at the BoE, it has been announced that Charlie Bean (who is also a Deputy Governor) will remain for an additional year, until 2014.

So just in case our warning that Goldman is about to launch turbo-mega QE in the UK weeks after the BOE decided to shelve it, here is Goldman itself confirming it.

Go long the GBP here at your own risk.