Bank of England appoints Clare Lombardelli as deputy governor

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Clare Lombardelli, OECD chief economist, has been appointed a deputy governor at the Bank of England, putting her in charge of reforming its monetary policy when it is seeking to quell an inflationary outbreak it was slow to anticipate.

The former Treasury official will succeed Ben Broadbent at the end of his term on July 1, the government said on Thursday. She will join the central bank at a key turning point, as it seeks to suppress the inflationary episode that took headline price growth to double-digits after Covid-19 lockdowns were lifted.

Economists widely expect the BoE to start cutting rates this year, but it is still grappling with persistent elements of inflation, particularly domestically generated services price growth.

Earlier this month, Lombardelli told the Financial Times that while inflation now appeared to be receding in big economies, “we are not out of the woods yet, and there is a fair way to go”. The UK inflation rate stayed steady at 4 per cent in January.

Lombardelli took over her OECD role in May 2023. Before she joined the Paris-based organisation, Lombardelli was chief economic adviser to the Treasury and joint head of the Government Economic Service.

“The challenge she faces is trying to shift the BoE’s approach to its core job of steering monetary policy,” said Neville Hill, co-founder of Hybrid Economics, a consultancy.

“They need a fresh pair of eyes of thinking about how BoE thinks about inflation risks, how it expresses them, how it manages the difficulties of hitting its inflation target. We are in a world where inflation is likely to be more volatile than in the past,” he added. 

The appointment extends a trend of former top Treasury civil servants gaining senior posts at the BoE.

Last year, the House of Lords economic affairs committee called for a review of the way senior BoE appointments are made, pointing out that three of the bank’s deputy governors previously worked at the Treasury, as did the recently retired Sir Jon Cunliffe.

“While they are undoubtedly able, this does not strengthen the perception of independence,” the Lords said at the time.

Lombardelli’s tasks on arriving at the bank will include implementing reforms following former Fed chair 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 she 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 tackling financial and economic issues both domestically and internationally.”

Andrew Bailey, BoE governor, said: “Clare’s impressive career means she brings a huge amount of relevant experience and expertise to the Monetary Policy Committee, and the bank more broadly, at a time of great importance for the UK economy.”

Lombardelli started her career at the BoE and has also worked at the IMF. She also served as an economic adviser to David Cameron when he was prime minister.

Her appointment is for a term of five years. Broadbent, the current deputy governor for monetary policy, has served at the BoE since 2014.