Promising start for Bank of England governor Mark Carney

Bank of England governor Mark Carney marked his 100th day in office on Tuesday with his monetary policy assured and a political battle looming over stability risks from the government's housing-market plans.

Since starting on July 1, he's implemented forward guidance on interest rates, loosened liquidity requirements for lenders and put Jane Austen on a bank note, while the economy he oversees has shown increasing signs of strengthening, sending bond yields to a two-year high. Chancellor of the Exchequer George Osborne persuaded him to leave the Bank of Canada to become the first foreigner to run the 319-year-old central bank, giving him a mandate for change.

With guidance keeping monetary policy on hold, Carney's next big challenge may centre on the central bank's financial policy committee (FPC).

Deadlocked US budget talks raise the spectre of a debt default, and even if that's avoided, he must still lead a review of the government's "Help to Buy" programme to boost mortgage lending, making him the arbiter of an initiative that has been criticised for threatening to stoke a housing bubble.

"The emphasis is going to switch to the FPC," said Keith Wade, chief economist at Schroders in London. "The challenge for Carney will be if the housing market really takes off, as this could bring him into conflict with the government."

Carney's guidance is aimed at avoiding a sharp rise in borrowing costs that could choke off the recovery. Under the policy, the Bank of England plans to keep its key rate at a record-low 0.5 per cent until unemployment drops to 7 per cent, something the central bank does not see happening until the end of 2016.