Mark Carney swears he’s the only person in the history of the world who has done it, and while the understated Canadian economist doesn’t strike me as boastful—and presumably would know better than anyone—confirming with 100% certainty that no one else has ever been head of the central banks of two different countries (Canada and the United Kingdom, in his case) seems impossible, given that some of these institutions go back hundreds of years.
What can be said unequivocally, though, is that he’s the only foreigner ever to lead the hoary, 329-year-old Bank of England, where the doormen sport pink morning coats and black top hats (think Liberace meets Royal Ascot) and the pedigrees are of the Oxbridge variety. Then again, Carney’s an Oxford man himself, (D.Phil. in economics)—and a Harvardian (A.B., economics) to boot.
Which brings us to a third point: Carney, 58, urbane and ultranetworked—naturally, he did a stint at Goldman Sachs—is able to move between British, Canadian, and American power circles better than anyone on the planet, requiring otherworldly emotional intelligence, or EQ. Carney may not be your cup of tea (or coffee), but he’ll likely know how you take it.
Not to suggest that Carney is deficient when it comes to IQ. His doctoral thesis, “The Dynamic Advantage of Competition,” was described as “impressive” by his adviser. But it was also an ideal subject for one seeking a career in business or public policy. Fair enough.
In fighting trim—he ran a three-hour, 31-minute marathon eight years ago—and partial to dark suits, white shirts, and muted ties, Carney today dons three primary hats; chairman and head of transition investing at
Brookfield Asset Management
(ticker: BN), chair of Bloomberg’s board of directors, and the United Nations special envoy for climate action and finance. He’s also on boards at Stripe, Pimco, and Harvard. Sustainability is a thread that runs through much of his work these days. Treasury Secretary Janet Yellen wrote to me in an email that Carney’s “deep knowledge of climate policy, economics, and finance and unique ability to convene has made him an invaluable leader in the global fight against climate change.”
I recently sat down with Carney to pick his brain on a number of subjects and began by asking why the clean-energy sector has been tanking lately.
“People struck some deals on the basis of old assumptions,” he says. “The world’s changed, interest rates are higher, they’re going to be higher for longer. If you locked in a deal or made your assumptions based on commodity and financing costs five years ago, you’re gonna get your head handed to you.”
Speaking of “higher, longer,” why is he in that camp? Because, he says, inflation was worse than anticipated, and the Federal Reserve had to play catch-up. But another under-the-radar point with go-forward implications, he adds, “is [the Fed’s] bias is to tighten policy a bit more than to look for immediate opportunities to loosen policy.”
Ergo, don’t expect any sort of race to cut. “Rates have reached a level where they’re starting to do their job,” Carney says. “They’re going to need to stay here for a while. And the data are really going to need to fill in, particularly on the labor market side and on the inflation side, before we start to see any relief on interest rates.”
In hindsight, Carney thinks the Fed shouldn’t have come out with a new monetary-policy framework, or “average inflation targeting,” which “basically tied their hands,” he says. “[The Fed] said, ‘Look, we’re not going to start to loosen policy until we’ve made up for past underinflation. And in fact, we’re going to keep rates low and provide stimulus such that we return the economy to where it was prior to the pandemic.’ More specifically, they were talking about the labor market and for all groups in the labor market. [And] they viewed a series of price pressures as transitory. So the combination of those two is [why] they left policy too loose for too long.”
Adds Carney: “But let me say a word in their defense. They could have acted earlier, they should have acted earlier, but they would have shaved off the peak of inflation. That would have been better for Americans, but we still would have had that big rush of inflation because of the pandemic, with Russia’s illegal invasion of Ukraine. We’ve had a series of supply shocks, and central banks have had to recalibrate the economy to line up with where supply is.”
Isn’t monetary policy at odds with fiscal policies such as the Chips Act and the Inflation Reduction Act, which are stimulative?
“It’s an interesting question,” says Carney. “Those were two huge pieces of legislation, which are driving a huge amount of investment in America. That’s adding stimulus to the economy and making this economy stronger [and] the country more competitive, but it means you have to do a bit more recalibration on monetary policy.”
Carney’s spit-and-polish belies a modest upbringing. He was born in Fort Smith, Northwest Territories (pop. 2,248), south of the Rapids of the Drowned on the Slave River and just north of the Alberta border. The town is a 13-hour drive down to Edmonton, where Carney moved when he was 6. Carney’s father was a high school principal, then a professor of education at the University of Alberta.
Carney is a fan of the National Hockey League’s Edmonton Oilers and the Canadian Football League’s Edmonton Elks—the Eskimos until 2020—a parallel-universe Green Bay Packers team: historically successful, community-owned, with green, gold, and white jerseys. He played a bit of hockey himself—“almost all of us [Canadians] do,” he says wryly—and fancied a career in the NHL.
Alas, not to be. “He was the best backup goalie Harvard ever had,” reports Glenn Hutchins, a fellow Harvard man, chairman of investment firm North Island, and co-founder of Silver Lake. Carney continued net-minding for the Oxford team, which is how he met his wife, Diana Fox, who played on the women’s team (she was more skilled, he insists) and is now an economist and consultant for the Eurasia Group, among others.
Carney went on to Goldman and in 2003 left to join the Canadian government’s finance apparatus. Five years later, he was named governor of the Bank of Canada in the teeth of the global financial crisis, which Canada weathered well. This from “Why Canada Didn’t Have a Banking Crisis in 2008,” a National Bureau of Economic Research report: “While in 2008 and 2009 the U.S. experienced bank failures, bailouts, and the worst recession since the 1930s, Canada had no bank failures, no bailouts, and its recession was less severe….”
The “why” has much to do with structural differences between the U.S. and Canadian banking and regulatory systems, but Carney-philes say he deserves credit, too. Rather than follow Ben Bernanke’s lead and buy underperforming assets from banks, or increase the money supply, Carney, among other moves, boosted liquidity by buying short-term liquid assets, which were easier to sell once the economy improved.
Carney was held in such high esteem that, a colleague says, “he could have had any job he wanted.” What Carney apparently wanted was high-profile and fraught. In July 2013, he accepted the Bank of England governorship just as Brexit was unfolding. Carney spoke out against the move, which undercut his universally loved godsend-from-the-colonies positioning. That and blowback from his restructuring moves reportedly made the even-keeled Carney testy at times with colleagues and the media.
After seven years, Carney left the BOE for a portfolio of positions—and perhaps in a holding pattern for the next big gig—including his role at Brookfield, an $850 billion assets-under-management Toronto-based alternative asset manager, founded 124 years ago as São Paulo Tramway, Light and Power Company, a Canadian-owned, Brazilian-based utility.
I’ll let Carney describe Brookfield today: “We invest in the backbone of the global economy,” he says. “Pipelines, infrastructure towers, and data centers. That’s been exploding in recent years; that trend is going to continue. We have $80 billion in renewables, $160 billion in infrastructure. We have about $270 billion of real estate assets around the world of all types. Also a big private credit business and an insurance business. We have very broad strategies, but with some consistent themes.”
Even among other private equity/alternative asset giants, Brookfield is a complicated beast, particularly for a man committed to net-zero carbon emissions working at a company with exposure to fossil fuels. (Carney has had to walk back a claim that Brookfield’s portfolio was carbon neutral.) Rising interest rates don’t make life easier for Brookfield, either.
What’s next for Carney? There has been chatter about him running for prime minister of Canada, not the U.K., possibly succeeding the current, embattled PM, Justin Trudeau. Is that true?
“I wouldn’t rule it out,” Carney says.
And what would a central banker bring to the table?
“What do I have? The core of what I do at Brookfield [is] invest in the real economy. The world is being rewired, it’s deglobalizing, it’s digitizing at an enormous pace. But what they probably don’t have as much of a sense of is what that means for physical investment.” That, Carney argues, is relevant expertise for the PM job.
Finally, I asked him to address a question that has long vexed Americans. What the heck is Canadian Thanksgiving, anyway?
“It’s a little more of a harvest festival in Canada than it is in the U.S.,” he says. “Yes, we have turkey. We have pumpkin pie. It’s a good holiday, but it’s on a Monday [in October], not quite as great as a holiday on a Thursday, because that leads into the whole weekend. The homecoming aspect of it in Canada isn’t as strong as it is in the U.S. You really want to be home in the U.S. on Thanksgiving. There are differences between the two, but in diversity comes strength. It’s kind of the same. Kind of different.”
Spoken like a man at ease moving across borders. Or the next PM of Canada. Or the next Fed chair—which would give Carney a clear, unprecedented, central banker trifecta.
Write to Andy Serwer at [email protected]
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