BOE Gets Management Shakeup as Carney Revamps Institution
Ben Broadbent and Nemat Shafik will become deputy governors at the Bank of England as Mark Carney leads the biggest management shakeup since the institution gained independence in 1997.
The appointments were announced along with news that Chief Economist Spencer Dale and Andrew Haldane, executive director for financial stability, will swap jobs, while Markets Director Paul Fisher will no longer sit on the Monetary Policy Committee. Broadbent is currently an external member of the MPC, while Shafik is an official at the International Monetary Fund.
The shift in the bank’s senior policy making jobs comes as Carney prepares to announce a new strategic plan for the three-century-old institution. He’s revamping the BOE as it defends its forecasting record and is dragged into the currency-manipulation scandal while battling criticism of the lack of women in top jobs.
“We’ve had quite a big turnover at the top since the arrival of Mark Carney, he’s taking a new-broom approach,” said Simon Wells, an economist at HSBC Holdings Plc in London and a former BOE official. “The direction of the MPC is a little more uncertain, given the scale of the changes and the musical chairs that are involved.”
Broadbent, 49, will replace Charlie Bean as deputy in charge of monetary policy July 1 and Shafik, 51, will become deputy for markets and banking, a new position, a month later. Anthony Habgood was named chairman of the BOE’s board.
Shafik, known by the nickname Minouche, will also join the nine-member MPC, which kept its key interest rate at a record-low 0.5 percent this month, in line with its forward guidance.
As part of the changes, Dale will leave the MPC and join the bank’s Financial Policy Committee starting June 1 as executive director for financial stability strategy and risk. Haldane will take Dale’s role and his seat on the MPC.
The departure of Fisher and Dale from the MPC removes one dove and one hawk, according to David Tinsley, an economist at BNP Paribas SA in London.
“It’s hard to know” what this means for policy, he said. “It certainly adds a degree of raised uncertainty as to how the debate on the MPC will go from the second half of this year, when most of the changes occur.”
Carney, who joined the BOE in July, will deliver the annual Mais Lecture in London’s financial district today, when he may outline the results of a review of the BOE’s future strategy.
The governor revealed the creation of the post of deputy for markets and banking last week as he answered lawmakers’ questions on the BOE’s knowledge of currency manipulation and its suspension of an employee. The Treasury said Shafik won the role after her “excellent” application to replace Bean.
Shafik will become the first woman to serve on the MPC since Kate Barker left in 2010 and will also join the board of the Prudential Regulation Authority and sit on the FPC. She will oversee the MPC’s eventual unwinding of its 375 billion-pound ($623 billion) bond-buying program, the BOE said.
She has a doctorate in economics from the University of Oxford and worked at the World Bank and U.K.’s Department of International Development before joining the IMF in 2011.
Broadbent, who will start his new role July 1, joined the BOE in 2011. His elevation marks the latest promotion of a former Goldman Sachs Group Inc. official within policy-making circles.
Carney previously worked at the New York-based bank as did European Central Bank President Mario Draghi and Federal Reserve Bank of New York President William Dudley. There have been four past Goldman employees sitting on the BOE’s policy committee since its creation in 1997.
“With a diverse combination of skills and experience, these appointments result in a well-rounded senior management team,” Carney said in a statement. They will “set the direction for an ambitious agenda of transformation for the institution and enable it to meet the challenges and opportunities it faces.”
Rob Wood, an economist at Berenberg Bank in London and a former BOE official, said he’s surprised the new monetary policy deputy governor isn’t an outsider, “given the need to shake up the culture.”
“Broadbent is probably halfway there,” he said. “He’s not a bank lifer and did start at the Treasury before working elsewhere. It doesn’t feel like a massive break from what’s already at the top of the bank.”
As chairman of the BOE’s governing board, known as the Court of Directors, Habgood will chair the Oversight Committee, which has started an independent investigation into the central bank’s links to the currency-manipulation scandal. The panel, comprised entirely of non-executive directors, said the probe will examine whether any BOE staff were involved in the rigging of foreign-exchange benchmarks.
Habgood, chairman of Whitbread Plc and Reed Elsevier Plc (REL), will replace David Lees on July 1.
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