|Next BOE chief sets high bar for policy change
The next head of Bank of England Mark Carney said today he would move carefully with any changes to the way the central bank runs monetary policy but suggested he might favour committing to stimulus for an economy over a period of time.
"In my view, flexible inflation targeting -as practiced in both Canada and the UK -- has proven itself to be the most effective monetary policy framework implemented thus far," Carney told US lawmakers.
"As a result, the bar for alteration is very high," he said in a written reply to questions from a parliamentary committee.
Carney, currently governor of the Bank of Canada and the first foreigner to run the bank in its 318-year history, faced a three-hour question-and-answer session with the committee after submitting his testimony.
He noted that while moving cautiously, reviewing monetary policies would be important.
After taking over at the Bank of Canada in 2008, Carney earned a reputation for successfully protecting the country from the global financial crisis and he now faces the bigger challenge of getting Britain out of a rut of almost zero growth.
Carney promised to keep Canadian rates near zero for about a year in April 2009 as the global crisis intensified, before the idea was taken up by the US Federal Reserve.
Carney also said that central banks "may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, inflation picks up".
However, markets could begin to doubt that kind of commitment if inflation rose above target, he added.