Incoming Bank of England deputy governor Clare Lombardelli has dismissed the idea of axing the UK's fiscal watchdog, affirming there is "widespread support" for the central bank's structure.
While set to join the Bank in July, Ms Lombardelli expressed her desire for a revamp in forecasting methods following last week's Bernanke review which highlighted flaws. During her appearance before Parliament's Treasury Select Committee, Lombardelli, who will succeed Ben Broadbent, addressed these issues.
Her comments come on the heels of former PM Liz Truss's statement that Bank of England governor Andrew Bailey should step down after the 2022 mini-budget fiasco and her wish to dismantle the Office for Budget Responsibility (OBR). Ms Lombardelli told MPs she's a staunch supporter of both the Bank of England's framework and the Governor, as well as being a "big fan" of the OBR, having been privy to its economic evaluations during her time at the Treasury.
"It's very valuable to have that independent expert judgment on fiscal policy," she stated. This parliamentary session occurred shortly after ex-US Federal Reserve chair Ben Bernanke's report criticized the Bank of England's forecasting models as significantly deficient.
Mr Bernanke also discovered that Bank staff were utilising "out-of-date" software which had not been adequately maintained. Ms Lombardelli emphasised that there will be "a shake-up in response" to the findings in the report.
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The deputy governor was also questioned about when interest rates currently at a 15-year high of 5.25% will next be reduced. "I'm not going to put a date on when I expect the UK to start the process of loosening monetary policy but it is clearly the direction of travel, certainly for European economies," she stated.
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