(Adds comments from Swagel, Frankel, background)
By David Milliken and William Schomberg
LONDON May 15 British finance minister George
Osborne has again picked an overseas candidate for a top job at
the Bank of England, naming former White House adviser Kristin
Forbes as an interest rate-setter at the central bank.
Forbes was the youngest-ever person appointed to the White
House's Council of Economic Advisors (CEA), where she served
President George W. Bush from 2003 to 2005.
"Dr Kristin Forbes is an economist of outstanding ability
with real practical experience of policy making," Osborne said
as he announced the appointment on Thursday.
Forbes is currently an economics professor at the
Massachusetts Institute of Technology.
Osborne has previously looked abroad for BoE appointments,
poaching Governor Mark Carney from the Bank of Canada and hiring
International Monetary Fund official Nemat Shafik as a deputy
He also looked beyond the British-based pool of candidates
when he appointed Britain's European Union ambassador, Jon
Cunliffe, as a deputy governor.
Forbes will start on July 1 and serve a three-year term.
With Shafik, the appointment means the MPC will have two women
on it for the first time in around a decade.
She fills the last open seat on the nine-member Monetary
Policy Committee which was up for grabs after one of its
external members, Ben Broadbent, was named as a new deputy
governor of the Bank.
ECHOES OF U.S. RECOVERY
A former colleague at the White House said Forbes worked on
U.S. policy issues at a time when the country's economy was
struggling to shake off the effects of a recession in the early
2000s, something that has echoes in Britain today.
"She was there when we had a recovery but for many Americans
it didn't feel like it," said Philip Swagel, a former CEA chief
of staff. "My sense is that that is the British experience. The
data says things are getting better but many people are still
waiting for it."
Forbes will join the Bank of England as it comes under
pressure to signal more clearly that it will start to raise
interest rates from a record low where they have sat for more
than five years. A pickup in the economy can run further before
inflation risks mount, the BoE has said.
While advising Bush, Forbes worked on a statement by the
Bush administration that stressed the openness of the U.S,
economy to foreign investment at a time when public opinion was
hostile to outsourcing of jobs abroad, Swagel said.
"She has policy experience so she understands the pressures
of actually making policy. But she also has a superb academic
background," he said.
Forbes's research has focused on the risks of a financial
crisis in one country spilling over into others, macroprudential
regulation and capital flows.
Jeffrey Frankel, a professor at Harvard who has collaborated
with Forbes on several projects, praised her as a good
macro-economist who will approach the BoE job with an open mind.
"She is a very sensible, pragmatic macro-economist and if
the question is would she be more hawkish or dovish, I just
don't know. It depends on what the circumstances are," he said.
Frankel urged against drawing conclusions about her economic
views on monetary policy from the fact that she served in a
"The Republican party in the United States in recent years
has been dominated by some people with some pretty strange
views, and I don't think that should reflect on her. She is not
at all like that."
As well as the White House and academia, Forbes has also
worked for the World Bank, Morgan Stanley and the U.S. Treasury.
Britain's finance ministry said 34 people, including 10
women, applied for the MPC role, which was advertised in April.
Carney said in a statement that he welcomed Forbes's
(Additional reporting by William James and Ana Nicolaci da
Costa; editing by William Schomberg/Jeremy Gaunt)