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Carney quells expectations of major changes

Mark Carney, the next governor of the Bank of England, cooled expectations that he would push for big changes in British monetary policy but showed he may bring ideas from Canada with him when he takes over later this year.

Speaking to the Commons Treasury Committee yesterday, Carney said that making a commitment to keeping monetary stimulus unchanged for a set period of time could be needed to help restore damaged confidence of firms and households.

He played down speculation that he would rapidly press for bigger changes at the bank.

Due to take over in July, Carney was also quick to praise its policy of focusing on inflation.

"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. As a result, the bar for alteration is very high."

He gave no clear signal that he would push for more government bond-buying by the Bank of England, stressing the risks posed by quantitative easing and research by the Bank of Canada that showed its effectiveness diminished with time.

Meanwhile, the Bank of England voted yesterday to freeze its key interest rate at a record-low 0.50 per cent and maintain its quantitative easing cash stimulus as Britain stands on the brink of another recession.

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