The stealth (or not so stealth any more) take over of the world by Goldman Sachs continues. Following the withdrawal of Axel Weber from ECB contention, and his almost guaranteed replacement with one Goldman alumnus Mario Draghi, now Goldman is set to take over the trifecta of Central Banks (since another Goldmanite Bill Dudley already controls the New York Fed): the BBC reports that: "the new member of the Monetary Policy Committee (MPC) will be Ben
Broadbent, a senior economist at Goldman Sachs." Not at all surprisingly "he will replace the
leading proponent of rate rises, Andrew Sentance, when he leaves the
Bank of England's interest rate committee in May." We wonder what Goldman's "bent" on dovishness will be. Next up: Goldman just needs to plant its operative at the BOJ and the SNB and the company's global take over will be complete.
Mr Broadbent is a widely respected economist who spent some of his early career at the Treasury. In the past year or so, Goldman Sachs has tended to be more upbeat about the UK and global recovery than many in the city, and Mr Broadbent's own commentaries have been consistently supportive of the government's tough approach to the budget, arguing that the economic recovery was strong enough to withstand the effect of spending cuts. Only today, he and a colleague published a paper suggesting that households were less vulnerable to interest rate rises than generally thought.
Many will therefore expect Mr Broadbent to follow Mr Sentance in voting for higher interest rates when he joins the committee in June [TD: many will also be very surprised]. Three voted for a higher rates at the February metting, with 6 against. There is another meeting this week, but most do not expect the balance to change until April or May, if then. Mr Broadbent's first MPC meeting will be in June.
However, Broadbent has also stressed in the past that a weak pound would be crucial to offsetting the impact of spending cuts, by pushing up exports. The pound could strengthen if interest rates rise faster in the UK than in other countries. Today's Goldman Sachs analysis, which he co-authored, says only "the MPC is divided and there are respectable arguments both for, and against, higher rates. But the sensitivity of households' interest payments is not top of the list."
Critics will note that there are still no women on the nine person committee, which lost its only female member last summer. Officials say the post has gone to the stand-out candidate, whose reputation speaks for itself. They also say they received 27 applicants for the post, of whom only one was a woman.
More important, to some, than the gender imbalance will be the marked imbalance of outlook on the new MPC. When Mr Broadbent joins, all of the four external members of the MPC will have spent most of their career as macro-economists. In the past there has been a desire to mix in some micro-economists, or at least people, like Mr Sentance, with experience as industrial or business economists. Arguably, that is now a missing voice on the MPC. But neither that or the gender imbalance are likely to be resolved any ti
Conrgratulations to Broadbent, and congratulations to Goldman on their ongoing, and totally uncontested take over of the world.