Quantcast

Trade-focused academic Tenreyro picked as Bank of England policymaker


Reuters

UPDATE 2-Trade-focused academic Tenreyro picked as Bank of England policymaker


* Academic Tenreyro replaces hawk Kristin Forbes on MPC
    * Tenreyro's research has focused on trade, wages
    * LSE economist Tenreyro has criticised Brexit

 (Adds details, Tenreyro views on UK outlook, Barro comments)
    By William Schomberg and Andy BruceLONDON, June 19 (Reuters) - Britain named Silvana Tenreyro,
a trade-focused London School of Economics academic, as a Bank
of England rate-setter on Monday at a critical time for the
economy as Brexit talks begin.
    Tenreyro's appointment also comes amid a deepening split
over the need to raise interest rates for the first time since
before the global financial crisis a decade ago.
    She will replace the strongest advocate for a rate hike on
the BoE's Monetary Policy Committee, meaning economists will
scrutinise her opinions even more closely than usual.
    Tenreyro's work has focused on issues including trade and
wage growth, both of which are important factors for the BoE's
thinking as Britain prepares to leave the European Union and as
pay increases have fallen behind inflation.
    Robert Barro, a Harvard University economics professor who
steered Tenreyro through her doctorate, said she had been a
great success -- particularly on research about the links
between international trade and exchange rate regimes.
    "She is very knowledgeable about economic fluctuations and
the role of monetary policy. So, I think she's a great
appointment," Barro said.
    Tenreyro - who has British, Italian and Argentine
citizenships, according to her resume on the LSE website - was
one of 280 economists who signed a public letter which said it
would be a "major mistake" for Britain to leave the EU in the
run-up to last year's Brexit referendum.
    In an annual Financial Times survey of economists published
in January, Tenreyro described a "difficult trade-off" for the
BoE in balancing rising inflation and weak growth - echoing
Governor Mark Carney's language at the time.
    "The (next move in interest rates) could go either way.
Certainly the terms for Brexit will affect where the economy
ends up - and the subsequent actions of the BoE," Tenreyro said.
    She also thought Britain's economy would expand around 1.5
percent this year, roughly in line with the BoE's central
forecast at the time.
    "My pessimism regarding Brexit has not moved much: I think
it will have a negative impact on the UK economy and Europe more
generally," Tenreyro said.
    She spoke about the risks of a "hard Brexit" in which
Britain leaves the EU single market and imposes stringent
immigration quotas.
    "The effects on the UK economy will certainly be negative --
many firms will need to rethink and reorganise production as
they lose talented workers," she told the FT.

    REPLACING A HAWK
    Before working at the LSE, Tenreyro was an economist at the
U.S. Federal Reserve Bank of Boston between 2002-04 and an
external member of MPC at the Bank of Mauritius between 2012 and
2104, the ministry said.
    She replaces Kristin Forbes whose MPC term expires this
month. Forbes was one of the three policymakers who voted last
week to raise interest rates. The MPC's five other members voted
to keep rates on hold.
    Jordan Rochester, a foreign exchange strategist with Nomura
in London, said it was unlikely that Tenreyro would immediately
vote against the majority who remain in favour of keeping rates
at 0.25 percent.
    "We would assume a slight swing to a more dovish vote," he
said in a note to clients.
    The BoE is also seeking a replacement for former deputy
governor Charlotte Hogg who quit in March after failing to
report a potential conflict of interest involving her brother's
position at Barclays <BARC.L>.
    The finance ministry said on Monday that Hogg's replacement
would be appointed in due course, restoring the MPC to its full
quota of nine members.

 (Editing by Alexander Smith)
 ((william.schomberg@thomsonreuters.com; +44 207 542 7778;
Reuters Messaging: william.schomberg.reuters.com@reuters.net))

Keywords: BRITAIN BOE/TENREYRO (UPDATE 2)



This article appears in: Politics , Stocks , World Markets , Economy


More from Reuters

Subscribe






See headlines for BARC









Research Brokers before you trade

Want to trade FX?