The Bank of England will determine its own strategy and McKinsey & Co. isn’t dictating a review of the 319-year-old institution, Chief Operating Officer Charlotte Hogg assured directors last month.
“McKinsey’s role was not to set the strategy, though they were providing input from their experience of other similar organizations, and arranging visits to some,” Hogg said at the Nov. 14 meeting of the bank’s supervisory board, known as the Court of Directors, according to minutes published on its website today. The U.S. consultancy “was facilitating the process, but it was being run by the bank.” the minutes show.
Governor Mark Carney hired McKinsey this year to examine strategy and Deloitte LLP to conduct a “value for money” study after the institution gained unprecedented powers to regulate the financial industry. Hogg, a former McKinsey employee who joined the central bank at the same time as Carney in July, is overseeing the consultants’ work.
Hogg presented progress reports on the two reviews to the Court. Directors described them as helpful, while Court member Bradley Fried was “impressed by the progress” so far. Carney told the directors that they will have an chance to review the “full emerging plans” in January at a specially-arranged meeting.
James Proudman, an official who has just returned to the BOE from a secondment at Lloyds Banking Group Plc, is playing a “key role” in the working group on the McKinsey review, according to the minutes.
Bloomberg News first reported Carney’s hiring of McKinsey on Oct. 22. A prior study by the same consultancy in the late 1960s had a “limited” impact, former BOE official Guy de Moubray said in an interview published this month.
Among other matters discussed by the directors, the central bank will begin publishing more detailed projections in its quarterly Inflation Report beginning in February, Chief Economist Spencer Dale told the Court.
“The main items outstanding for the second half of 2013 were to publish an enhanced forecast evaluation exercise and to publish more quantitative information about the MPC’s forecasts,” Dale said, as he updated the Court on the BOE’s response to the so-called Stockton Review, which examined its forecasting record.
“The first of these had been delivered in the November Inflation Report, and the second would appear in the February 2014 Report, slightly later than intended, reflecting the need to divert resources temporarily to the design and introduction of forward guidance,” the minutes cited him as saying.
Carney also briefed directors on a letter he subsequently sent to Parliament’s Treasury Committee in response to a query on the bank’s involvment in the design of the government’s Help to Buy scheme. He proposed to reply saying that “no part of the bank had approved the overall design of the scheme, nor had the bank been formally consulted,” according to the minutes.