Bank hires US economist to vote on interest rates

THE BANK of England yesterday hired Kristin Forbes to the monetary policy committee, replacing outgoing external policy maker Ben Broadbent.

She is an economics professor at the Massachusetts Institute of Technology and previously worked in the US Treasury and the World Bank.

Forbes will be the monetary policy committee’s first female member in five years when she joins on 1 July.

She will quickly be joined by Nemat Shafik who has been appointed from the International Monetary Fund as the bank’s new deputy governor for banking and markets when she joins in August.

Forbes is known to have a near unrivalled knowledge of financial contagion and capital flows. Of her research, one publication that is likely to get a lot of attention as central bank watchers prepare for her arrival is her 2000 paper, “A reassessment of the relationship between inequality and growth”.

In it, Forbes sets out to challenge “the current belief that income inequality has a negative relationship with economic growth,” as before its release, policymakers had begun to claim that reducing inequality could spur growth.

“Dr Kristin Forbes is an economist of outstanding ability with real practical experience of policy making,” said George Osborne, who announced the decision to appoint her for a three-year term.

“It’s a sign of the high regard in which the Bank of England is held around the world that someone of Kristin’s ability wishes to be part of them.”

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