| LONDON, July 4
LONDON, July 4 Mark Carney's arrival this week
at the Bank of England was hailed as the start of a new era, one
in which he would seek to drive Britain's economy out of the
But a run of surprisingly positive economic data has
prompted some economists to wonder how long it will be before he
has to think about ending stimulus rather beefing it up.
This week's first policy meeting under his leadership, which
wraps up on Thursday, is unlikely to be a momentous one, in
contrast to the hoopla that greeted the Canadian in London.
No changes are expected until August's meeting at the
That is when Carney could begin to push the central bank to
try new ways to achieve "escape velocity" in Britain's recovery,
which has just started to show some long-awaited momentum after
years of economic stagnation.
Manufacturing and services sector surveys this week capped a
run of stronger-than-expected data which has prompted many
economists to predict growth in the second quarter could be
double the 0.3 percent of the first three months of 2013.
George Buckley at Deutsche Bank said the surveys were close
to the level at which, in the past, the central bank has
eventually tightened monetary policy.
"It's nothing short of ridiculous how the UK numbers have
turned around ahead of Mr Carney's arrival, suggesting he's got
very lucky timing," said Neville Hill, an economist at Credit
Suisse in London. "The case for the (bank) doing something on
Thursday is really pretty limited."
Adding to the challenge of any quick action by Carney,
several other top policymakers have been sceptical about the
need for changes, including the possibility of buying more
Only two of more than 50 economists polled by Reuters last
week - before the data - predicted changes at this week's
meeting, even as yields on government debt, including British
gilts, rose on concerns about the U.S. Federal Reserve
eventually halting its bond-buying.
The poll gave a 40 percent chance of the BoE reviving its
bond-buying programme during 2013.
MARKETS WILL HAVE TO WAIT
The bank usually announces the outcome of policy meetings
with a terse statement to financial markets. That means
investors will probably have to wait for nearly two weeks to
find out if Carney himself voted for more bond buying.
At recent MPC meetings, six policymakers have voted against
more stimulus and only three have voted in favour, including
Mervyn King who retired as governor last week
Minutes of this week's meeting will be published on July 17.
Andrew Sentance, a former member of the policy committee who
is known as an inflation hawk, said he expected an exit strategy
from Britain's record low interest rates of 0.5 percent and from
bond-buying would come onto Carney's agenda over the next 12
months, if economic data continued to be positive.
"Planning for the monetary exit will be the big challenge of
Carney's governorship," Sentance said.
Clearer signs of Carney's more immediate plans will emerge
On Aug. 1, the policy committee meets again, this time with
new inflation and growth forecasts which could provide Carney
with an opportunity to put his support behind more bond-buying,
should he agree with the need for it.
On Aug. 7, the bank's policymakers are due to report back to
Britain's finance minister George Osborne on the merits of
giving long-term guidance about interest rates, something Carney
pioneered in Canada to give more confidence to businesses and
households to spend while borrowing costs remain low.