Carney's conundrum

The Governor's work is never done.  Just because the recovery has "taken hold" does not mean that he can relax.  The Guardian obliquely hints at his problem:

The Bank of England will be in no hurry to raise interest rates during the key pre-election year of 2014 despite being taken aback by the strength of the economy's recovery over the past three months.

Mark Carney, the Bank's governor, said recovery had "finally taken hold" but that Threadneedle Street believed an early end to ultra-low interest rates would threaten business and consumer confidence.

Carney stressed that the Bank could deal with the threat of a house-price bubble without the need for dearer borrowing and that there was no guarantee its nine-strong monetary policy committee would raise rates even when unemployment fell to 7%, the level at which an increase in the cost of borrowing will first be discussed under the governor's forward guidance plan.

It is all very well to be in no hurry to raise interest rates but action cannot be postponed indefinitely.  Even now, inflation remains above target.  If house prices continue to race ahead, and bubbles continue to develop on stock markets, Governor Carney will be forced to dampen that irrational exuberance and take the punchbowl away.  He will then find himself between the Scylla of letting the economy get out of control and the Charybdis of rising interest rates with all the pain that offers to middle England mortgage-holders.  Then we will see if he is worth all the money that Chancellor Osborne agreed to pay him.