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Appointment of Paul Fisher to the Monetary Policy Committee of the Bank of England

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Appointment of Paul Fisher to the Monetary Policy Committee of the Bank of England House of Commons Treasury Committee Appointment of Paul Fisher to the Monetary Policy Committee of the Bank of England Sixth Report of Session 2008–09 Report, together with formal minutes Ordered by the House of Commons to be printed 21 April 2009 HC 415–I Published on 24 April 2009 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue & Customs and associated public bodies. Current membership Rt Hon John McFall MP (Labour, West Dunbartonshire) (Chairman) Nick Ainger MP (Labour, Carmarthen West & South Pembrokeshire) Mr Graham Brady MP (Conservative, Altrincham and Sale West) Mr Colin Breed MP (Liberal Democrat, South East Cornwall) Jim Cousins MP (Labour, Newcastle upon Tyne Central) Mr Michael Fallon MP (Conservative, Sevenoaks) (Chairman, Sub-Committee) Ms Sally Keeble MP (Labour, Northampton North) Mr Andrew Love MP (Labour, Edmonton) John Mann MP, (Labour, Bassetlaw) Mr George Mudie MP (Labour, Leeds East) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Mr Mark Todd MP (Labour, South Derbyshire) Mr Andrew Tyrie MP (Conservative, Chichester) Sir Peter Viggers MP (Conservative, Gosport) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/treascom. A list of Reports of the Committee in the current Parliament is at the back of this volume. Committee staff The current staff of the Committee are Dr John Benger (Clerk), Sîan Woodward (Second Clerk and Clerk of the Sub-Committee), Adam Wales, Jon Young, and Jay Sheth (Committee Specialists), Phil Jones (Senior Committee Assistant), Caroline McElwee (Committee Assistant), Gabrielle Henderson (Committee Support Assistant) and Laura Humble (Media Officer). Contacts All correspondence should be addressed to the Clerks of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5769; the Committee’s email address is [email protected]. Appointment of Paul Fisher to the MPC 1 Contents Report Page Summary 3 1 Introduction 4 The appointment and our inquiry 4 The appointment process 4 2 Paul Fisher 5 Background on Paul Fisher 5 Our evidence 5 Conclusions 6 Conclusions and recommendations 7 Formal minutes 7 Witness 8 List of written evidence 8 Reports from the Treasury Committee during the current Parliament 9 2 Appointment of Paul Fisher to the MPC Summary In this Report we follow our practice of reporting on whether those appointed or re- appointed to the Monetary Policy Committee (MPC) of the Bank of England fulfil our criteria for appointments to the MPC of professional competence and personal independence. The Report relates to the appointment of Paul Fisher as Executive Director, Markets with effect from 1 March 2009. We welcome the decision of the Governor of the Bank of England to make appointments to the posts of Executive Directors of the Bank which carry membership of the Monetary Policy Committee subject to external advertisement, noting that this procedure was successfully used for the first time in the case of the appointment of Paul Fisher. We are satisfied that Paul Fisher meets our two criteria for appointment to the Monetary Policy Committee of professional competence and personal independence. We acknowledge Paul Fisher’s strong record in academia and the Bank of England, but note it is important that he should widen his experience of financial markets. We wish him every success as a member of that body. Appointment of Paul Fisher to the MPC 3 1 Introduction The appointment and our inquiry 1. On 12 February 2009 the Bank of England announced that Paul Fisher was to be appointed Executive Director, Markets, with effect from 1 March.1 As such, Paul Fisher became a member of the Bank’s Monetary Policy Committee (MPC). In accordance with our established practice for those appointed or re-appointed to the MPC, we decided to report on whether Paul Fisher fulfilled our criteria for appointments to the MPC of professional competence and personal independence. We asked Paul Fisher to complete a questionnaire and to provide a curriculum vitae and then we took oral evidence from him on 21 April. That oral evidence and his answers to our questionnaire will be published in Volume II of this Report. We are grateful to Paul Fisher for his evidence. The appointment process 2. The vacancy filled by Paul Fisher was created by the appointment of Paul Tucker, the bank’s previous Executive Director, Markets, as Deputy Governor, Financial Stability. On 19 June 2008, the Chancellor of the Exchequer reported in a letter to the Chairman of this Committee that the Governor had indicated to him that in future the Bank would “advertise externally the two Bank Executive Director posts which carry MPC membership”.2 This change was designed to ensure that all future appointments to the MPC would be the subject of external advertisement, following the Government’s decision in 2007 to make external appointments to the MPC subject to such advertisement.3 3. Paul Fisher’s appointment was the first to be made under the new arrangements. The post was advertised externally and candidates were interviewed by a committee chaired by the Governor. The responsibility for making such executive appointments is a decision for the Governor of the Bank, after consultation with the Chancellor of the Exchequer.4 In previous Reports we have welcomed the Government’s decision to advertise for future vacancies for external members of the MPC.5 4. We have previously welcomed the decision of the Governor of the Bank of England to make appointments to the posts of Executive Directors of the Bank which carry membership of the Monetary Policy Committee subject to external advertisement and we are pleased to note that the appointment of the Executive Director, Markets, was subject to this process. 1 “Appointment - Executive Director, Markets”, Bank of England News Release , 12 February 2009, www.bankofengland.co.uk 2 Letter from the Chancellor of the Exchequer to John McFall MP, available at www.parliament.uk/documents/upload/Chancellor08619F.pdf 3 Treasury Committee, Twelfth Report of Session 2006-07, The Monetary Policy Committee of the Bank of England: ten years on, HC 299-I, para 78 4 Bank of England Act 1998, c 11, section 13 5 HC (2006-07) 299-I, paras 79, 84 4 Appointment of Paul Fisher to the MPC 2 Paul Fisher Background on Paul Fisher 5. Paul Fisher has worked as an economist at the Bank of England since 1990, having previously worked at the University of Warwick between 1980 and 1990 where he specialised in research on macroeconomic models. From 1999 to 2002, he served as Private Secretary to Sir Edward George, who was then the Governor of the Bank of England. In that capacity, Paul Fisher was responsible for organising the Governor’s office and acted as secretary to committee meetings of the Governors and Executive Directors. From 1995 to 1999, he was Head of the Conjunctural Assessment and Projections Division in which role he was responsible for the Bank’s domestic and international forecasts and economic assessment of the major international economies. The data analysis role included assessing the work of the Bank’s regional agents. From June 1997, he presented both data assessment and forecasts to the MPC. 6. Since 2002, Paul Fisher has worked as Head of Foreign Exchange Division (FED) at the Bank. In this role he was responsible for the management of the UK’s official foreign exchange reserves and the foreign currency operations of the Bank of England. As part of the Bank’s Markets Area, this division was also responsible for gathering market intelligence on international financial markets to feed in to monetary policy and financial stability. Since 2006, he worked as part of the MPC secretariat, co-writing the Minutes. As head of FED, he also chaired the London’s Foreign Exchange Committee. He has written extensively on economic models of the UK economy and written or contributed to numerous articles on macroeconomic models, business cycles and exchange rates.6 Our evidence 7. In oral evidence, we asked Paul Fisher about his experiences relevant to his post as Executive Director, Markets, including— • his experience outside academia and the Bank of England; • liaison with financial market participants; • the concept of moral hazard within financial markets; • confidence in Sterling and intervention in the foreign exchange markets; • regulation of the financial markets; • the concerns of holders of subordinated debt in respect of the authorities’ response to the banking crisis; • his international experience; and 6 “Members of the Monetary Policy Committee”, Bank of England website, www.bankofengland.co.uk Appointment of Paul Fisher to the MPC 5 • the role of credit ratings in the Bank of England’s programmes. We asked him about his priorities in his new post, including ways in which he will seek to add to the public’s understanding of the role and decisions of the MPC. We also questioned him about current issues in monetary policy, including— • the outlook for the economy and the impact of quantitative easing; • the impact of the first and the potential for a second fiscal stimulus; • house prices and the housing market; • unemployment; • the outlook for the international economy; • the switch from the Retail Prices Index to the Consumer Price Index; and • the composition of the MPC.
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