Governor of the Bank of England Mark Carney will remain in his role until 31 January 2020, the Chancellor of the Exchequer announced today (11 September).
Last month it was reported Carney had been asked by the Treasury to stay on another year in a move to settle the City's Brexit concerns.
The extension was agreed in an exchange of letters between Carney and the Chancellor Philip Hammond published this morning.
Hammond said: "I'm delighted that the Governor has agreed to stay in his role for a further seven months to support a smooth exit from the European Union and provide vital stability for our economy.
Sir Jon Cunliffe, Deputy Governor of the Bank of England with responsibility for financial stability has also been re-appointed, effective from 1 November.
Hammond added: "I'm delighted to announce the re-appointment of Sir Jon Cunliffe for a further term as Deputy Governor, and I'm confident his extensive experience will continue to be a valuable asset to the Bank of England."
Last week Prime Minister Theresa May gave her support to Carney staying on in his role to ensure a "smooth Brexit" and an "effective transition" at the central bank.
During a meeting with the Treasury Select Committee (TSC) on Tuesday, Carney confirmed he has been in discussions with Chancellor Philip Hammond about extending his term, however, he noted the decision rested with the government.
According to the Financial Times, May gave her approval to the idea which would likely see Carney remain in the role until the second half of 2020.
A senior government figure said: "The PM thinks he has done a good job in difficult circumstances; he is well respected and has a good international standing."
The governor and Prime Minister have clashed in the past with May commenting in 2016 on how there would be "bad side effects" for Carney's monetary policy and Carney taking a negative view on the future of Brexit. However, it is understood they now have a good relationship.
Speaking to the TSC on Tuesday, Carney commented: "I fully recognise during this critical period, it is important everyone does everything they can to help with the transition of exiting the European Union.
"I am willing to do whatever I can in order to promote both a smooth Brexit and an effective transition at the BoE.
"It is an important time and we have an important supportive role to make sure whatever Brexit the government negotiates, it is a success, and providing a measure of continuity should help that."
In October 2016, Carney said he would step down in June 2019, two years short of the eight years governors usually serve.
Carney has already extended his term once at the Bank in a move to ensure continuity through the Brexit negotiations.
He had originally only intended to remain for five years after joining in 2013, but announced plans to stay an extra year four months after the Brexit Referendum in June 2016.
Anthony Gillham, head of investments at Quilter Investment, commented: "If Carney's tenure is extended he will have his work cut out, but the case for an experienced captain to guide the UK through dangerous waters has grown stronger as Brexit negotiations have dragged on.
"He will install a measure of certainty on monetary policy, which provides some air cover through what will surely be an unpredictable spell.
"As BoE governor, Carney has not always been universally popular, but appointing him as temporary caretaker through this period of transition does make sense."
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