Chancellor George Osborne has appointed a respected female economist as a Bank of England deputy governor, ending four years of an all-male interest-rate setting committee.
The appointment of Nemat Shafik, a deputy managing director of the International Monetary Fund, was one of three senior officials announced on Tuesday as part of a radical shakeup at the Bank under governor Mark Carney. Ben Broadbent, already on the monetary policy committee, will take over as a deputy governor from Charlie Bean when he retires this summer. City grandee Anthony Habgood becomes chairman of court at Threadneedle Street, managing the Bank's affairs other than monetary policy.
The appointment of Egyptian-born Shafik, who is also a British and US national, follows growing criticism of Osborne's failure to appoint a woman to the monetary policy committee. The nine-member committee, which meets monthly to set interest rates under the chairmanship of Carney, has been without a female member since Kate Barker left in May 2010.
Shafik's post is a new role at the Bank, deputy governor responsible for markets and banking. It means Carney now has four deputies. Her appointment, effective from August, comes as the Bank fights to shore up its credibility amid a worldwide probe into alleged rigging of foreign exchange markets. The 51-year-old was just 36 when she became the youngest ever vice president at the World Bank. In her new role at Threadneedle Street she will represent the Bank in meetings with other central banks, the IMF and other institutions and will sit on the BoE's financial policy committee and court of directors. From June she will take the place of Paul Fisher on the monetary policy committee when his term ends.
Carney, who is pushing through a shakeup of the Bank's structure, welcomed the three new appointments.
"With a diverse combination of skills and experience, these appointments result in a well-rounded senior management team at the Bank – one that will set the direction for an ambitious agenda of transformation for the institution and enable it to meet the challenges and opportunities it faces in maintaining monetary and financial stability," he said in a statement.
The Bank said that Shafik would be responsible for reshaping its operations and balance sheet, including "ensuring robust risk management practices". She will also help develop and implement "an eventual exit" from quantitative easing, whereby the Bank pumped billions in electronic cash into the flagging economy during the downturn.
Habgood, who is chairman of Whitbread, takes over as chair of the Bank's court of directors from David Lees, who leaves at the end of June.
As the new deputy governor for monetary policy, Broadbent will be responsible for the Bank's analysis of the UK and international economies that feeds into interest rate decisions. He takes on the post at a turning point in the cycle for borrowing costs. After five years at a record low of 0.5% interest rates are expected to start rising again in 2015, albeit gradually, as the economic recovery gathers steam.
Announcing the appointment, Osborne said: "I am delighted to announce the appointment of three such highly qualified and experienced people to join the Bank's already excellent executive team. Their impressive experience of business, economics and international finance will strengthen and diversify the Bank's top team and enable them to continue to face Britain's ongoing economic challenges from a position of strength".
In further changes, Spencer Dale, currently MPC member and Bank chief economist, will become executive director for financial stability, joining financial policy committee. He effectively swaps roles with Andy Haldane, currently executive director for financial stability, who becomes chief economist and joins the MPC.
Changes to the monetary policy committee will give market players plenty to think about as they seek to predict when the first move in interest rates will come.
David Tinsley, economist at BNP Paribas bank in London, said: "What does all this mean for the direction of policy? Well the truth is it is hard to know, but 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."
"In Paul Fisher's departure the MPC is clearly losing a 'dove'. But in Dale's move off the MPC it is also losing a 'hawk'. At the same time Nemat Shafik's views will be an unknown quantity for a while (she may hug the consensus until she feels more up to speed with the UK conjuncture). Andy Haldane has a reputation as a 'free thinker'. How this translates into his views on monetary policy are not clear."
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