Treasury on back foot as deputy Governor quits

One of the City's most high-profile economists, Rachel Lomax, is quitting her role as deputy Governor of the Bank of England at the end of June.

The Government has yet to find a successor for Ms Lomax, 62, who is leaving at the end of her five-year term, despite Gordon Brown's attempts to keep her on. A Treasury spokesman said the search for candidates had begun but a shortlist had not been put together yet.

An appointment needs to be made quickly because Ms Lomax has responsibility for monetary policy and sits on the influential Monetary Policy Committee. But the spokesman said that the Treasury must first appoint a new chairman for the Financial Services Authority, the City regulator, by the end of the month. The former CBI chief Lord Turner is only one of the candidates being considered by the Chancellor, Alistair Darling.

The deputy Governor role is a crown appointment, made on the advice of the Prime Minister. It will be a sensitive one to fill following the deterioration of relations between the Treasury, the Bank of England and the FSA caused by the Northern Rock debacle.

One internal candidate for the position would be Paul Tucker, the Bank's director of markets. The Governor of the Bank, Mervyn King, and his predecessor, Sir Eddie George, themselves came up through the ranks. External names include Paul Myners, chairman of Guardian Media Group, and Sir James Sassoon, the Treasury's ambassador to the City, a former UBS Warburg investment banker.

While the position is in the PM's hands, the Governor is consulted on the candidates. Sources say Mr King is keen that the deputy should be someone with strong markets experience rather than a civil servant. The Bank also needs a monetary expert to complement Sir John Gieve, the second deputy Governor, who came from the Home Office.

Ms Lomax is leaving the Bank because she wants to explore new ventures in business and has had enough of "watching monthly base rates". Over the past few years she has been a voice arguing for stability on the MPC, which meets monthly to review interest rates. The committee members tend to divide between the doves and hawks, but Lomax does not fall easily into either camp, and could be described as a dovish hawk. So far this year, she has voted twice for rates to be held and twice for a cut. She was even more cautious last year, voting on 10 occasions for rates to be maintained, once for an increase and once for a cut.

The Cambridge-trained economist was tipped as one of the favourites to succeed Mr King until he was reappointed by the Government for a second term.

Considered to be a brilliant administrator, Ms Lomax spent her early career at the Treasury, where she was private secretary to Nigel Lawson, then Chancellor, in the mid-1980s.

In a recent speech, Ms Lomax described the credit crunch as the "largest-ever peacetime liquidity crisis" and conceded there were many uncertainties facing the markets. She will have helped draw up the Bank's special liquidity scheme, launched a few weeks ago, which injected £50bn into the market by allowing banks to swap their mortgage securities for gilts.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administration Team Leader

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Recruitment Genius: Mortgage Advisor

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Ashdown Group: Solvency II Project Manager - 10 month contract - £800 p/d

£800 per day: Ashdown Group: A highly successful, global financial services co...

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Day In a Page

A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

A Very British Coup, part two

New novel in pipeline as Jeremy Corbyn's rise inspires sequel
Philae lander data show comets could have brought 'building blocks of life' to Earth

Philae lander data show comets could have brought 'building blocks of life' to Earth

Icy dust layer holds organic compounds similar to those found in living organisms
What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories

What turns someone into a conspiracy theorist?

Study to look at why some are more 'receptive' to such theories
Chinese web dissenters using coded language to dodge censorship filters and vent frustration at government

Are you a 50-center?

Decoding the Chinese web dissenters
The Beatles film Help, released 50 years ago, signalled the birth of the 'metrosexual' man

Help signalled birth of 'metrosexual' man

The Beatles' moptop haircuts and dandified fashion introduced a new style for the modern Englishman, says Martin King
Hollywood's new diet: Has LA stolen New York's crown as the ultimate foodie trend-setter?

Hollywood's new diet trends

Has LA stolen New York's crown as the ultimate foodie trend-setter?
6 best recipe files

6 best recipe files

Get organised like a Bake Off champion and put all your show-stopping recipes in one place
Ashes 2015: Steven Finn goes from being unselectable to simply unplayable

Finn goes from being unselectable to simply unplayable

Middlesex bowler claims Ashes hat-trick of Clarke, Voges and Marsh
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Atwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works