BOE governor Mark Carney sparks debate on how to cool housing market

Mark Carney has given himself one month to decide on what to do about the hottest topic in the British economy: the housing boom.

Batting away questions on a possible property bubble this week, the Bank of England governor pushed the onus for cooling the market on to his financial-stability officials. The Financial Policy Committee now has four weeks to prepare for a June 17 decision when it can either unleash untested tools to curb lending or come up with a good excuse as to why it did not.

With the economic recovery broadening and inflation under control, housing has become Carney's biggest domestic concern - and threat to his reputation - as he heads towards his first anniversary in charge of the bank. Tackling a property boom revved up by record-low borrowing costs and government incentives, the governor will need to keep the Treasury and rate-setting policymakers in the loop.

"It would be surprising if we didn't get something in June," said Mike Amey, a money manager at Pacific Investment Management. "The clearest component of economic strength in the UK at the moment is the housing market."

Carney said on Wednesday that interest rates were the "last line of defence" against housing risks and that the FPC would "look hard" at vulnerabilities.

Financial-stability officials have already ended incentives for mortgages and announced a set of bank stress tests. The panel, which will publish its recommendations on June 26, said it is ready to take more action if needed.