In a letter this morning, the chancellor said he wants Carney in place to support a “smooth exit of the United Kingdom from the European Union” and the transition of his successor.
“An extension of your term would ensure there is continuity at the Bank 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 UK’s withdrawal and the framework for the future partnership have been finalised,” Hammond wrote.
In his letter, Carney agreed that a successful Brexit relied on support from everyone “during this critical period”.
“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,” he said.
This is the second extension for the governor, who in November 2016 agreed to prolong the initial five-year term he committed to in November 2012, until June 2019.
Carney recently said that the possibility of a no deal Brexit is currently “uncomfortably high” – an outcome he warned would be “highly undesirable”.
Jon Cunliffe, deputy governor of the BoE was also reappointed to his role and his term will now last until October 2023.
Cunliffe will be responsible for the BoE’s work on financial stability. Alongside his role as deputy he will also be a member of the Financial Policy Committee, the Monetary Policy Committee, the Prudential Regulation Committee and the Banks Court of Directors.
Responding to the appointments, Conservative MP and chair of the Treasury Select Committee, Nicky Morgan, said that the announcement provides stability and clarity in this important period and noted that the government should use the extra seven months to continue properly palling its succession strategy.
"It should identify a candidate in good time for the Treasury Committee to scrutinise the appointment," Morgan said.