- Central bank hiring economist, adviser for new policy maker
- External MPC staffers key to promoting policy debate
Wanted: Two economists for a ringside seat at Bank of England policy making.
Applications close Friday for a senior adviser and an economist to work with incoming Monetary Policy Committee member Michael Saunders. The new recruits will join the elite research group supporting the four independent BOE policy makers, known as the External MPC unit -- a fertile recruiting ground for London’s financial district that has just lost one of its own to Goldman Sachs Group Inc.
The changeover highlights a key challenge for Governor Mark Carney: retaining staff who can help question any internal bias at the 322-year-old institution. While advising MPC members offers exceptional access to top-level policy discussions, it can also become a stepping stone to a more lucrative career elsewhere.
“Having regular direct contact with the MPC members obviously opens a lot of opportunities for young bank economists who want to move into the City,” said Conall Mac Coille, chief economist at Dublin-based securities firm Davy, who worked in the unit as adviser to former policy makers David Blanchflower and David Miles. “The external MPC members are not part of the bank’s management structure and don’t have the leverage to ensure their advisers get promoted. It’s not too surprising to see many of the economists employed in the MPC unit move into the private sector.”
The search for fresh talent comes at a critical juncture, as the U.K.’s referendum on its European Union membership bolsters uncertainty and clouds the outlook for policy. While the BOE has held its key rate at a record low for more than seven years, discussions over the next move are likely to intensify once the June 23 vote has passed.
Nicholas Fawcett, who advised outgoing official Martin Weale and previously worked in the central bank’s monetary analysis division, will join Goldman in June, a spokesman for the U.S. bank said. He will become a London-based executive director in the Global Economics Group, reporting to Jan Hatzius and Jari Stehn, and is now part of an external-MPC-alumni group that stretches from the world’s biggest lenders to other central banks and academia.
As well as Mac Coille, LinkedIn shows that former staffers include Gilberto Marcheggiano who is now at Goldman Sachs Asset Management, Charlotta Groth at Zurich Insurance, Amit Kara at HSBC, the Bank of Canada’s Jing Yang, the International Monetary Fund’s Neil Meads, and Paolo Surico, a professor at London Business School.
While Carney has singled out staff retention as one of his priorities, a period of pay restraint after the financial crisis may have contributed to the outflow over the years.
The MPC unit was borne out of a dispute in 1999 when some independent members complained they lacked the resources to carry out their own research. BOE management responded by giving each official two researchers to assist them with their work. The job ads for Saunders’ advisers show both roles require the ability to stimulate debate within the BOE.
Saunders will replace Weale in August, joining Kristin Forbes, Ian McCafferty and Gertjan Vlieghe as externals on the nine-member MPC.
“Making sure you’ve got very good people working for you is important,” said Andrew Sentance, a BOE policy maker from 2006 to 2011. “The external members of the MPC should be raising issues and challenging the thinking of the bank in a way that’s not the same as the internal members.”
There are few signs of discord under Carney. Previous governor Mervyn King oversaw a more fractious committee, with Blanchflower disagreeing publicly with him and Adam Posen saying his fiscal comments were too political.
“The way we should view the contribution of the external members is how much have they challenged the bank’s thinking on economic policy,” Sentance said. External members “haven’t been challenging enough over the past few years.”