The U.K. Treasury appointed Martin Weale to serve on the Bank of England’s nine-member interest rate-setting Monetary Policy Committee as the panel begins to split over how soon to exit its emergency stimulus measures.
Weale, who is currently director of the National Institute for Economic and Social Research in London, replaces Kate Barker, whose term on the panel ended May 31. The appointment will take effect in time for Weale to participate in the August rate decision, the Treasury said in an e-mailed statement.
The committee voted 7-1 last month to keep its benchmark interest rate at 0.5 percent, with Andrew Sentance making the first push for an increase in almost two years. Weale, 55, will be one of four so-called external members of the MPC, who are not career officials at the central bank.
Weale “will be more likely to surprise” than Barker, said David Kern, chief economist at the British Chambers of Commerce in London. “It’s very difficult to classify him as a dove or a hawk.”
As a member of The Times newspaper’s shadow Monetary Policy Committee, Weale voted last month for no change in rates or the 200 billion-pound ($302 billion) limit on quantitative easing, the newspaper said June 10. He said that although inflation was a concern, it was offset by the risks to economic growth from the weaker euro and the Greek crisis, according to The Times.
“Obviously I’m looking forward to the opportunity but I’m not in a position to comment on the state of the economy,” Weale said in a telephone interview today.
In December, Weale told lawmakers that there’s “some evidence” the central bank’s asset purchases may be fuelling bubbles in property and equities. Last month, he and colleagues wrote that the U.K. government may have to deliver even more fiscal consolidation in coming years to reduce its budget deficit.
“We do not expect the new appointment to lead to a change in policy in the near-term and still expect the first rate hike to come in November,” said Philip Rush, an economist at Nomura International Plc in London.
Weale has run the National Institute since 1995 and also worked as an adviser to the Office for National Statistics. NIESR’s clients include the Bank of England and the Treasury. A graduate of Cambridge University, he was a fellow at the Bank of England for a year in the mid-1980s and has also been a visiting scholar at the Federal Reserve Bank of Minneapolis.
All 60 economists in a Bloomberg News survey expect the central bank to leave the rate unchanged at a meeting on July 8. Economists also forecast it will maintain the amount of its bond-purchase program, a separate survey shows.
Out of 109 meetings of the panel, Barker cast dissenting votes five times. On four occasions she voted for a cut when the majority preferred no change and at one meeting she wanted an increase when the balance voted for no change. Overall, she voted 78 times for no change in interest rates. She voted 11 times for an increase and 20 times for a cut.
An advertisement for the part-time position in the Sunday Times in May said the appointment is for a three-year renewable term, with total compensation of 131,771 pounds plus health-care benefits. Thirty-four men and four women applied for the job, the Treasury said. It will be the first full panel to lack a woman since it was formed in 1997.
“I am extremely happy to welcome Martin Weale to the Monetary Policy Committee,” Bank of England Governor Mervyn King said in a statement. “His experience at the National Institute and as an academic will be invaluable to the work of the committee.”