Mervyn King Bio
From FXPedia
Mervyn Allister King first joined the Bank of England as a Director in 1990, and in 2003, he was appointed Governor. Prior to his tenure at the Bank, King had a distinguished academic career as a student and later as a lecturer as several of the world’s leading universities.
Considered an inflation hawk when compared to his contemporaries, King has faced some controversy during the summer and fall of 2007 around the subprime mortgage crisis in the U.S. The resulting global credit shortages caused a major U.K. bank to come dangerously close to being unable to meet its deposit demands, requiring assistance from the Bank of England.
Biography
Born in 1948, Mervyn King was a student at King’s College, Cambridge, and Harvard where he studied economics. He has taught and lectured at both Cambridge and Birmingham Universities and was Professor of Economics at the London School of Economics. He has also served as a Visiting Professor at Harvard and MIT.
In 1990, King joined the Bank of England as a non-Executive Director and one year later, assumed the position of Chief Economist and Executive Director. From 1998 to 2003 be was Deputy Governor before taking on the head position of Governor in 2003. [1]
Voting Record
From his earliest days with the Bank, he was seen as an “inflation hawk” and once he became a member of the Monetary Policy Committee (MPC) and received a vote on interest rate decisions, his reputation as an inflation fighter was confirmed. The MPC – since it was first formed in 1997 – meets every quarter to decide on interest rate changes. Only once since then has any Governor been on the loosing side of a vote, but this happened in August of 2005 when King was the only member of the MPC to vote against a quarter-point decrease.
Despite loosing this one vote, as the main author of the quarterly Inflation Report, King does have a great deal of influence and market watchers would be well-advised to pay attention to his comments regarding inflation concerns. In fact, during a speech to the Society of Business Economists (SBE) in May of 2007, King was abundantly clear that timely communication and full disclosure are paramount to the success of any central bank.
“The first task for a central bank is to communicate the case for price stability in a simple and straight forward way to as wide an audience as possible,” he noted in his address to the SBE in London. “It is as important to explain what we don’t know as what we do know,” he added. [2]
The following extract from this same speech offers further insight into the open communications that King believes is necessary between the Bank and the public:
- Our aim is to help people understand the thinking behind the Committee’s decisions, the hypotheses that the Committee entertains about the current conjuncture and the data that we shall be examining in order to discriminate them. That should help people work out how we are likely to react to future data as they come in. And it is why we place importance on the minutes of the monthly meetings and the quarterly Inflation report to convey a full explanation of our thinking. [3]
Reluctance to Join European Union
Mervyn King has also been vocal with his rejection with any movement for Great Britain to join the Eurozone, and has stated that he believes that the Bank of England has performed better than the European Central Bank (ECB). He has made it clear that he does not believe that the best interests of the UK can be served with having only one vote of many when setting ECB policy.
Related Links
References
- ↑ Bank of England website
- ↑ Mervyn King - Speech to the Society of Business Economists - May, 2007
- ↑ Mervyn King - Speech to the Society of Business Economists - May, 2007
