Chief economist Haldane to leave BoE

The Bank of England’s influential chief economist and monetary policy committee member Andy Haldane has announced he will leave his post in a surprise move.

Haldane will step down after the BoE’s monetary policy committee meeting in June, the central bank announced today (April 13). He will become become the chief executive of the Royal Society for Arts, a think-tank. Haldane was first appointed to the MPC in June 2014 and was twice reappointed to three-year terms, most recently in June 2020.

He played a leading role in the BoE’s response to the global financial crisis, under then governors Mervyn King and Mark Carney. He was also at the forefront of calls to simplify and tighten the regulation of the financial sector to prevent further crises.

In recent months, Haldane warned that the UK might be facing resurgent inflation once restrictions imposed because of Covid-19 were lifted. He was seen by market observers as one of the more hawkish MPC members this year

John Hawksworth, former chief economist at PwC, told Central Banking that “in some ways Andy Haldane has acted more like an external member of the MPC in being prepared to challenge conventional wisdom and, in particular, look to disciplines outside economics for fresh insights”. 

Tony Yates, an economist and former BoE senior official, called Haldane “an important and creative thinker” who “did much to give the impression that the BoE was not stuck in the intellectual mud”. Haldane, Yates said, “didn’t seem to like the grind of monetary policy making, honing the message and probing how it should evolve minute by minute”. 

“BoE speeches are going to get less interesting, but they are in total going to get more focused on the policy grind, and will shoot the intellectual breeze less, and inject less noise to peer through for those who earn their bread predicting the next policy change,” Yates said. 

“The world of ideas and policy might well experience a net gain,” with Haldane at the RSA, Yates said. “Andy can write about whatever he likes now, without restraint, and he has a lot to offer on topics far from the BoE’s remit. And the BoE press office will not have to man the policy message barricades so nervously.”

In a statement, Haldane called the BoE “a fantastic institution and I loved my 32 years in public service there”. He praised BoE governor Andrew Bailey’s “exceptional leadership” and said the central bank’s officials “will continue to serve the people of the UK with distinction”.

Bailey said Haldane would be “sorely missed” and had been “an exemplary public servant” who had made “major contributions to the bank’s work in financial stability and monetary policy-making”. He added that Haldane had been “an imaginative and creative thinker on the wide range of issues the UK economy faces, as well as helping create and drive forward new ways for the bank to engage with the public”.

Haldane has spent his entire career at the Bank of England, which he joined in 1989, with a secondment to the International Monetary Fund. Haldane had also chaired the UK government’s Industrial Strategy Council, which was disbanded in March this year, since October 2018. He has also served as a member of the BoE’s financial policy committee.

The BoE said Haldane has been the co-author or author of four books and around 200 articles. He took an undergraduate degree in economics at the University of Sheffield, followed by a Master’s degree from Warwick University.

Leading thinker

Several of his public statements on the future of banking regulation after the crisis were very widely commented on. The US news magazine Time declared him one of the worlds’ 100 most influential people in 2014.

In 2010, he was one of the co-authors of the London School of Economics report on the future of finance. The report argued for new approaches to regulation and Haldane became one of the most prominent public thinkers on this subject.

In 2012, he attracted considerable comment when he met some members of the Occupy protest movement and publicly endorsed some of their criticisms of the financial sector. Haldane said Occupy had helped start a “reformation of finance”.

“At the heart of the global financial crisis were and are problems of deep and rising inequality,” Haldane told the 2012 Occupy Economics conference. “We have seen, first, inequality-induced crisis and, latterly, crisis-induced inequality.”

Haldane gave another noteworthy speech in 2012, titled “The dog and the Frisbee”, to the Federal Reserve’s annual gathering of central bankers at Jackson Hole in the US.

“In financial regulation, less may be more,” Haldane argued in the speech. He said that for postwar economists, “the path less followed has been to study optimal choice under uncertainty – the inability to form priors on the distribution of future outcomes – rather than risk”.

Haldane said that financial regulation had become ever-more complex, likening the “Tower of Basel” to the Biblical Tower of Babel. Stability might be better preserved by imposing simple principles to regulate the financial sector, he argued.

He suggested five measures: “de-layering the Basel structure; placing leverage on a stronger regulatory footing; strengthening supervisory discretion and market discipline; regulating complexity explicitly; and structurally reconfiguring the financial system”.

In an August 2014 article for Central Banking, Haldane suggested that central banks faced several possible futures. In one future, he said, they might find it possible to combine “plain-vanilla” monetary policy with “a more settled pattern” of regulatory rules.

But another possible outcome, Haldane said, might see central bankers having to make ever-more complex interventions to regulate the financial sector. “Which central bank path is the most likely over the next 25 years? Your guess is almost certainly as good as mine,” he wrote.