The current Bank of England Governor Mark Carney has agreed to stay in his current role until the end of January 2020.
"The extension was agreed in an exchange of letters between the Governor and the Chancellor (U.K. finance minister) published this morning," the government said in a statement Tuesday. The governor had been due to step down at the end of June 2019 — just two months after the March 29 deadline for the U.K.'s departure from the European Union.
In his letter to Finance Minister Philip Hammond, Carney appreciated the support from the prime minister and expressed his willingness to do whatever it takes to facilitate a smooth Brexit.
"I recognize that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit. Accordingly, I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England and I can confirm that I would be honored to extend my term to January 2020," Carney said.
U.K. Prime Minister Theresa May had earlier backed Carney to remain in the job until 2020. This decision aims to give some stability to the U.K. economy while Brexit takes place. In a letter to Carney, Hammond confirmed the extension of his appointment to the end of January 2020.
"An extension of your term would ensure there is continuity at the Bank (of England) during this exceptional period and would also allow for a new governor to be appointed during the Autumn next year after the terms of the U.K.'s withdrawal and the framework for the future partnership have been finalized," Hammond said in the letter.
But the decision wasn't welcomed by everyone. Former UKIP (U.K. Independence Party) leader and Brexit proponent Nigel Farage took to Twitter to criticize the move, calling it "appalling."
Meanwhile, Andrew Sentance, a senior economic adviser at PwC and a former member of the Bank of England's monetary policy committee, compared Carney to former British Prime Minister Margaret Thatcher.
Sterling remained steady on Tuesday afternoon, trading a touch over 1.30 against the dollar, signaling stability with the continuation of leadership at the central bank. A number of analysts had earlier pointed to uncertainty at the Bank of England as a reason for recent sterling weakness.
Jane Foley, a foreign exchange strategist at Rabobank, told CNBC last week that the more uncertainty for the U.K. markets, i.e. a change to a new governor at the Bank of England, would just create even more upset.
"If we have consistency at the Bank of England, then that will help calm nerves to some extent. A different governor will open sterling to potential more vulnerability," she said.
The finance ministry also announced the reappointment of Jon Cunliffe as the deputy governor until the end of October 2023.