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Macro News 18/03/14 MACRO NEWS 18/03/14 Rob Wood, Chief UK Economist | [email protected] | +44 20 3207 7822 UK: SHAKE-UP AT THE BOE Berenberg Macro Flash A shake-up at the top of the BoE was announced today. It represents a significant break with the past. two key Deputy Governor roles being taken by excellent candidates who have spent most or all of their career outside of the BoE. There was also a reshuffling of the pack below the new appointments. Nemat Shafik, the new Deputy Governor, will be the first woman on the MPC since Kate Barker left in 2010. The implications for monetary and financial policy are unclear, with one of the new appointees views currently not well known and one rate setter’s position vacant. This shake-up is a prelude to a speech by Mark Carney later today explaining other changes that will made following an external review the Bank of Eng- land commissioned. The changes made were: Dr Ben Broadbent, currently an external member of the nine-member Monetary Policy Committee (MPC), will re- place the retiring Charlie Bean as Deputy Governor for Monetary Policy. Dr Nemat Shafik will take up the new position of Deputy Governor responsible for Markets and Banking. She has been Deputy Managing Director of the IMF since April 2011, and before that she was Permanent Secretary of the UK Department for International Development (DFID). She will take Paul Fisher’s (Executive Director for Mar- kets) position on the MPC, and will be appointed to the Financial Policy Committee (FPC) and the board of the Prudential Regulation Authority. Andy Haldane and Spencer Dale will swap jobs, the former becoming Chief Economist and the latter becoming the Executive Director for Financial Stability Strategy and Risk. The result of these changes is to leave one slot empty on the MPC, the position vacated by Ben Broadbent, and possibly to raise FPC membership by one. We may hear more on the FPC point in Mark Carney’s speech later. The one surprise is that the Deputy Governor for Monetary Stability was not appointed from completely outside the BoE. That being said, Ben Broadbent has spent much of his career outside the Treasury and BoE, working for Goldman Sachs for several years. He joined the MPC in 2011 as one of the four “external” voting members on the nine person committee, meaning he retained independence. Monetary policy Ben Broadbent appears to be more hawkish than Charlie Bean. But Spencer Dale, who has now left the MPC, has also built a reputation as one of the more hawkish members. Andy Haldane and Nemat Shafik, Spencer Dale and Paul Fisher’s re- placements on the MPC, respectively, are unknown quantities for monetary policy. There is also now an unfilled MPC posi- tion – the one vacated by Ben Broadbent. The hawkishness or dovishness of the Committee is still up for grabs. Financial policy Nemat Shafik will become one of the most powerful figures at the BoE, holding positions on the MPC, FPC and Prudential Regulation Authority. But her views are currency not well known. Any public statements from her will now be key, as they were when Mark Carney was announced as the new Governor in late 2012. The remaining uncertainty about Financial Poli- cy is that, net, these appointments expand the FPC by one person. Mark Carney’s speech later today may provide further details. This message has been produced for information purposes for institutional investors or market professionals, it is not a Joh. Berenberg, Gossler & Co. KG financial analysis within the meaning of § 34b or § 31 of the German Securities Trading Act (Wertpapierhandelsgesetz), no 60 Threadneedle Street investment advice or recommendation to buy financial instruments. The message does not claim completeness regarding the London EC2R 8HP information on the developments referred to in it. On no account should it be regarded as a substitute for the recipient’s Phone +44 20 3207 7889 procuring information for himself or exercising his own judgements. The message may include certain descriptions, state- www.berenberg.com ments, estimates, and conclusions underlining potential development based on assumptions, which may turn out to be [email protected] incorrect. Berenberg and/or its employees accept no liability whatsoever for any direct or consequential loss or damages of any kind arising out of the use of this message or any part of its content. -- For full economics reports please visit our website or contact [email protected]. 1/1 .
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