(Bloomberg) -- The UK Treasury named Clare Lombardelli, chief economist at the OECD, to serve as the Bank of England’s deputy governor for monetary policy, leaving a majority of women on the panel that sets interest rates for the first time.

Lombardelli, who was the Treasury’s chief economic adviser until 2023, will begin her five-year term on July 1 and arrives at a crucial turning point for the BOE’s policy and forecasts. She will succeed Ben Broadbent, whose term is finishing.

The BOE is weighing a pivot toward cutting interest rates for the first time since inflation surged and an overhaul to its forecasting methods after criticism that it was too slow to respond to double-digit price growth. 

Former Federal Reserve Chair Ben Bernanke is expected to make recommendations about the BOE’s economic modeling and communications in April. The Treasury said Lombardelli will “lead the actions” in response to the review by Bernanke.

It means that there will be more women than men on the BOE’s nine-member Monetary Policy Committee for the first time. More women have joined the rate-setting committee since criticism over a lack of diversity at the bank.

What Bloomberg Economics Says ...

“Lombardelli’s appointment to an extremely prominent and influential position at the BOE therefore raises the risk that the central bank is more hawkish from the second half of this year, when she takes up her post, relative to our expectation. That increases the risk that our forecast for rates to fall to 4% by the end of 2024 proves too dovish.

One caveat — external member Jonathan Haskel will leave the MPC at the end of August when his second term ends. He has been one of the most hawkish policymakers in recent times. Both Catherine Mann and Pill are also up for reappointment later in the year but we expect their terms to be extended.”

—Dan Hanson and Ana Andrade, Bloomberg Economics. Click for the REACT.

Lombardelli leaves the Organization for Economic Cooperation & Development after just over a year at the Paris-based institution and is the latest former Treasury civil servant to join the MPC. 

She also previously served as George Osborne’s principal private secretary when he was Chancellor and private secretary for economic affairs to then-Prime Minister David Cameron. She started her career at the BOE and also worked at the International Monetary Fund.

Broadbent has served as deputy governor since 2014 and has been on the MPC since 2011 after working at Goldman Sachs.

The OECD’s current stance on monetary policy with Lombardelli as chief economist and her previous comments indicate she may be cautious about cutting the benchmark lending rate from its 16-year high of 5.25%. 

In its economic outlook in February, the OECD urged global policymakers to “remain prudent to ensure that underlying inflationary pressures are durably contained.” While it saw scope for lowering rates in the US and eurozone this year, it warned that the “policy stance should remain restrictive for some time to come.” 

It did not directly comment on the UK scenario but forecast that UK inflation will be at 2.8% in 2024, largely in line with the US and eurozone countries. Last year direct comments from Lombardelli had also shown caution over reducing rates too quickly.

“Our guess is that as an ex-BOE staffer, she will have a laser focus on the inflation target and tend to a more hawkish viewpoint,” said Elizabeth Martins, UK economist at HSBC. “There is no immediately obvious shift in the balance of doves and hawks on the committee.”

Lombardelli’s appointment will fuel concern over a Treasury takeover at the BOE with some Conservative Members of Parliament accusing the central bank of group think. It means that three of the four deputy governors will have a Treasury background, as is the case currently. Deputy Governors Dave Ramsden and Sam Woods were also at the department, as was the outgoing Broadbent. 

Jagjit Chadha, director of the National Institute of Economic and Social Research, wrote last year that “there is a perception that the BOE has been taken over by the Treasury since the financial crisis, with the bank increasingly providing a kind of retirement home home for former Treasury officials.”

“Clare brings significant experience to the role tackling financial and economic issues both domestically and internationally,” Chancellor of the Exchequer Jeremy Hunt said.

BOE Governor Andrew Bailey said she brings “huge amount of relevant experience and expertise to the Monetary Policy Committee, and the bank more broadly, at a time of great importance for the UK economy.”

The OECD said Lombardelli will be replaced by Alberto Santos Pereira, a long-serving official at the Paris-based organization who has twice stepped in as interim chief economist in the past.

--With assistance from Philip Aldrick and William Horobin.

(Updates with background on the appointment.)

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