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Wednesday, 24 April, 2002, 14:42 GMT 15:42 UK
Chancellor reshapes rate-setting body
Bank of England Monetary Policy committee
MPC meetings will look different in future
The Bank of England's Monetary Policy Committee - which sets UK interest rates -is being reshaped by the Chancellor just weeks after the Budget.

One of the most outspoken members of the committee, Sushil Wadhwani, is leaving on 31 May, and will be replaced by economist Marian Bell, who spent many years at the Royal Bank of Scotland.

It looks like the debate will narrow with a lot less focus on new economy

Philip Shaw, Investec
In a surprise appointment, Ms Bell will join former Confederation of British Industry economist Kate Barker as the second woman on the nine-person committee.

The MPC is widely expected to begin raising interest rates later this year if the consumer boom continues.

In another change, the Bank of England has said that high flyer Paul Tucker, the Bank's deputy director for financial stability, would replace Ian Plenderleith as one of its representatives.

And another Bank of England appointee, deputy governor David Clementi, will retire at the end of August.

The Bank and the Chancellor each appoint four members of the MPC, which is chaired by Sir Edward George, the governor of the Bank.

"I am delighted that Marian Bell has agreed to join the Monetary Policy Committee. Her extensive experience as a financial economist will enable her to make an invaluable contribution to the work of the MPC," said Mr Brown.

An independent voice

Many economists expressed regret that Mr Wadhwani's voice would no longer be heard on the committee.

He was a leading "dove", often arguing against the majority view that interest rates had to be raised.

"Sushil is a great loss. He was an independent voice and made an active and independent contribution. You have to be a strong character to face out the majority on the MPC as Sushil did," said Geoffrey Dicks, chief UK economist at the Royal Bank of Scotland.

Mr Wadhwani also believed that the Bank of England should worry more about asset prices, such as the prices of stock and bonds, and watch currency markets closely.

He argued that the UK economy could grow faster without inflationary consequences as a result of the "new economy", companies based on technology and computers.

"In terms of how wide the debate has been on interest rates on the MPC, that will be one of the losses with Sushil's departure. It looks like the debate will narrow with a lot less focus on new economy effects for a start," said Philip Shaw, chief UK economist at Investec.

Distinguished career

Marian Bell is a well-known and respected commentator on economic affairs who has spent most of her career at the Royal Bank of Scotland (now merged with NatWest).

She left two years ago to set up her own consultancy firm, Alpha Economics.

Ms Bell, who studied at Oxford and Birkbeck College of the University of London, was also a Treasury economic adviser between l989 and 1991.

Her views on interest rates are not known.

See also:

05 Apr 01 | Business
Who's Who at the MPC
15 Apr 02 | Business
Bank chief explains UK euro delay
04 Apr 02 | Business
UK rates kept on hold
20 Feb 02 | Business
Two voted against UK rate freeze
11 Mar 02 | UK Politics
Howard hails Brown's bank move
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