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Clare Lombardelli, the OECD’s chief economist, was appointed deputy governor of the Bank of England, tasked with reforming the Bank’s monetary policy in a bid to quell an inflationary epidemic that it had been slow to anticipate.
The former Treasury official will succeed Ben Broadbent when his term ends on July 1, the government said on Thursday. He will join the central bank at a key inflection point, as it seeks to suppress the inflationary episode that drove double-digit price growth after Covid-19 lockdowns were lifted.
Economists widely expect the BoE to start cutting rates this year, but it is still grappling with lingering elements of inflation, particularly growth in domestically generated services prices.
Earlier this month, Lombardelli told the Financial Times that while inflation now appears to be falling in large economies, “we are not out of the woods yet, and there is a good way to go.” The UK inflation rate remained stable at 4% in January.
Lombardelli took over the OECD role in May 2023. Before joining the Paris-based organization, Lombardelli served as chief economic advisor to the Treasury and joint head of the Government’s Economic Service.
“The challenge he faces is trying to shift the BoE’s approach to its core task of guiding monetary policy,” said Neville Hill, co-founder of Hybrid Economics, a consultancy.
“They need a new pair of eyes to think about how the BoE views inflation risks, how it expresses them, how it manages the challenges of reaching its inflation target. We are in a world where inflation is likely to be more volatile than in the past,” she added.
The appointment extends the trend of former senior Treasury officials landing senior positions at the BoE.
Last year, the House of Lords Economic Affairs Committee called for a review of how the BoE’s senior executive appointments are made, pointing out that three of the bank’s deputy governors had previously worked at the Treasury, as well as Sir Jon Cunliffe, recently retired.
“While they are undoubtedly capable, this does not reinforce the perception of independence,” the Lords said at the time.
Lombardelli’s duties once he arrives at the bank will include implementing reforms following former Fed Chairman Ben Bernanke’s review of the BoE’s forecasting technique, which is expected to be published in April.
The bank said in a statement that it will also be responsible for the BoE’s research agenda, as well as a new data and analytics strategy.
The appointment was made by Chancellor Jeremy Hunt, who said: “Clare brings significant experience to the role addressing financial and economic issues at both a national and international level.”
Andrew Bailey, Governor of the BoE, said: “Clare’s impressive career means she brings a huge amount of relevant experience and expertise to the Monetary Policy Committee, and to the Bank more generally, at a time of great importance for the ‘UK economy’.
Lombardelli began his career at the BoE and also worked at the IMF. He also worked as an economic adviser to David Cameron when he was prime minister.
His role will last five years. Broadbent, the current deputy governor for monetary policy, has served at the BoE since 2014.