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‘Housing will be watching new Bank Governor closely’

As the new Governor of the Bank of England gets stuck into his first week in the job, CIH chief executive Grainia Long asks what his tenure could mean for the housing industry…

“The new Governor of the Bank of England finally took up his post on Monday and I find myself wondering how he’s been getting on in his first few days in the role.

“Canadian Mark Carney – variously eulogised as “extraordinarily charismatic”, “a rock star of finance”, “the outstanding central banker of his generation” and even likened to George Clooney – took the Tube to work on his first day on Monday.

“Mr Carney, a former Goldman Sachs executive, was appointed last autumn by the Chancellor George Osborne from the Bank of Canada. It was Mr Osborne by the way who described him as “the outstanding central banker of his generation”.

“Personally, I’m less interested in the rock star image than I am in his ability to do the job.  Mr Carney has been tipped to shake up the Bank of England – the Chancellor apparently chose him to act as a new broom and the man himself has described his tenure as one of “significant transition”.

“The housing industry will certainly be watching the new Governor very closely.  His first Monetary Policy Committee meeting takes place today (Wednesday 3 July), and there has been much debate on whether we should expect a further (and more ambitious) round of quantitative easing (QE) to continue the pace of economic stimulus.

“The British Chambers of Commerce has urged him to expand the QE programme, while the former Conservative chancellor Lord Lamont has argued against it, saying it makes recovery harder in the long run.

So it will be interesting to see what happens there today, but for me the bigger issue – in particular for housing professionals – is his future decisions on interest rates.  No-one is expecting the committee to increase rates today, but what about in the future?

“CIH’s recent poll with Ipsos MORI found that one in three people paying rent or mortgage in Great Britain are already worried about being able to pay next year.  That figure rises to more than four in ten in London.

“Clearly, people are already stretched financially – and that’s with interest rates at their current level.  One or two interest rate rises could have serious implications – we could be facing much higher levels of housing stress, repossessions and homelessness.

“I won’t therefore be the only housing professional listening carefully to the language used by Mr Carney when he sets out his views about how the Bank of England will manage its responsibilities in future weeks and months.

“He arrives at the bank following the spending round announcements by the Chancellor and the Chief Secretary to the Treasury.  They acknowledged that housing has a particular role to play as a form of infrastructure, but failed to follow this with the kind of game changing stimulus we need to tackle the housing crisis.  A missed opportunity to put housing centre stage in the Chancellor’s growth strategy. Time will tell whether the new Bank of England Governor is willing to use the levers at his disposal to create the conditions for growth in the housing market.”

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