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Govt plays down rift with Mark Carney

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The Prime Minister’s allies have downplayed suggestions Theresa May is critical of the Bank of England’s monetary policy amid a recent war of words.

The Financial Times reports recent comments by May have caused concern at the Bank and Treasury that the Government was looking to intervene after she warned of “bad side effects” from loose monetary policy.

In her Conservative party conference speech, May said: “While monetary policy – with super-low interest rates and quantitative easing – provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects.

“People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.”

Last week Carney said he would not “take instruction” from politicians.

He said: “Politicians have done a very good job of setting up the system. Where it can be difficult sometimes is if there are political comments on our policies as opposed to political comments on our objectives.

“The objectives are what are set by the politicians. The policies are done by technocrats. We are not going to take instruction on our policies from the political side.”

The comments come ahead of a decision by Carney as to whether he will serve as Bank governor until 2021, or quit the post as originally planned in 2018.

A source told the newspaper: “Nobody inside Number 10 seemed to get how her [May’s] words might be interpreted.”

But one aide says the negative interpretation of the speech was a misunderstanding.

They say: “He [Carney] is highly regarded by the Prime Minister. He has done a great job since the Brexit vote and she would be delighted were he to decide to serve out his full term.”

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