Mark Carney’s quest to improve the credibility of Bank of England forecasting will enter a crucial stage as he begins picking the candidate to lead the institution’s projections.
Applications close today for the head of monetary analysis, a role created as part of the governor’s management shakeup announced last month with a swathe of new appointments and reporting lines. While the central bank has adopted measures to shore up forecasting in response to a 2012 review, Carney must now decide whether the official to take charge of that task can be found within the institution’s existing talent pool.
“It’s an inescapable fact that the forecasting record hasn’t been particularly good,” said Stuart Green, an economist at Banco Santander SA in London. “The bank is mindful of that, but also they need to be seen to be adding resource. The question is whether someone external will get the role, and that could be taken as a reference to the poor forecasting.”
The BOE’s overhaul of analysis was partly prompted by the Stockton Review, which said it should encourage staff to be more assertive and include financial-stability risks in its forecasts. In addition to releasing more detail on its underlying judgments, the BOE is doing more to allow staff to challenge senior officials, Chief Economist Spencer Dale told Bloomberg News in February.
The job posting suggests BOE executives are looking to the successful candidate to restore the image of the forecasting department. It says the bank “faces a key challenge in making a success of its monetary analysis responsibilities.”
As part of Carney’s changes, the BOE is seeking to fill seven other roles, including directors of supervision for small and large banks, and a director of financial-market infrastructure. Applications for those jobs also close today.
Internal candidates for the monetary analysis post may include Simon Hayes, who has rejoined the BOE to oversee forecasting after eight years at Barclays Plc, and the governor’s private secretary, Alex Brazier.
Others who may be in the running include Nicola Anderson, an adviser in the BOE’s financial-stability division, Phil Evans, who previously led the projections division, and James Proudman. He recently returned from a secondment to Lloyds Banking Group Plc and was involved in a working group linked to the McKinsey & Co. review of the BOE’s operations.
“This is a prime example of them creating roles to keep senior people,” said Simon Wells, an economist at HSBC Holdings Plc in London who previously worked at the BOE. “There’s any number of people who could fill that role.”
The appointee will be part of a revamped analysis division, headed by Ben Broadbent, who will become deputy governor in July, and Andy Haldane, executive director for financial stability, who will replace Dale as chief economist in June.
In a speech today, Haldane turned his attention to asset managers and said officials may need to monitor them as closely as banks. Policy makers should consider the possible threats posed by investment decisions in the $87 trillion industry, he said at an event at the London Business School.
“Carney is trying to reform and modernize the bank,” said Grant Lewis, an economist at Daiwa Capital Markets in London. “They will be looking for someone with a good central bank background and someone who can provide heavy-weight analysis as well as being able to set the agenda. They need someone with a very good pedigree.”