Bank of England chief Mervyn King has been re-appointed for another five years, the British government said today, ending speculation over his future due to the Northern Rock bank crisis.
King, 60, has been under the spotlight in recent months as he and the government sought to stabilise financial markets and restore consumer confidence in the banking sector after the near-collapse of Northern Rock.
Prime Minister Gordon Brown's spokesman Michael Ellam said that the central bank boss's appointment had been approved by Queen Elizabeth II. King's term of office was due to expire on June 30, 2008.
King was criticised from some quarters because the Bank of England, unlike the US Federal Reserve and the European Central Bank, initially refused to inject cash into the money markets to help banks with liquidity problems in the wake of the US subprime crisis. But he reversed that decision after Northern Rock was forced to apply for emergency central bank loans.
He was also said to have clashed with Britain's Financial Services Authority watchdog over help for the mortgage lender.
King, who has been in his current post since 2003 after a spell as deputy governor and chief economist, had previously warned that banks were piling up too much bad risk and it was not the central bank's function to bail them out.
Britain's finance minister Alistair Darling welcomed King's re-appointment. King, who is also head of the Monetary Policy Committee that sets British interest rates, recently gave a gloomy assessment of the economic outlook for Britain in 2008, warning of accelerating inflation and slowing growth.
He has warned that rising oil, domestic energy and food prices could push up household bills to such an extent that inflation could rise about 3% - the government-set ceiling target.
At that point, King is required to write to the government explaining why inflation has breached its upper target level. That happened for the first time in April last year when Britain's 12-month inflation rose to 3.1%.
