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Bank's rate cuts guru quits MPC and returns to US
Hugo Duncan11.12.08
David Blanchflower tonight stepped down from his role at the Bank of England, robbing Threadneedle Street of its arch-dove who spotted the recession early and argued for major cuts in interest rates long before anyone else.
Blanchflower, 56, known as Danny across the City after the legendary Tottenham Hotspur captain of the Fifties and Sixties, will step down from the rate-setting monetary policy committee at the end of May.
The US-based expert on employment decided not to take a second term at the Bank, having joined in 2006, but to return to Dartmouth College in New Hampshire.
When he joined the MPC, he was ridiculed for his papers on sex and happiness before being hailed as the man who realised sooner than fellow MPC members the extent and danger of the economic downturn.
The Treasury also said today that Paul Tucker will succeed Sir John Gieve as the Bank's Deputy Governor for financial stability in March 2009.
Blanchflower, who flies over from the US every month at taxpayers' expense to take part in MPC meetings, has voted for rate cuts every month since the onset of the credit crunch.
Until recently he has seen his calls for drastic action ignored by other members of the rate-setting committee.
In a letter to the Chancellor, Blanchflower said: "My intention all along was to only serve a single term, having been given three years' sabbatical leave from Dartmouth. I will, of course, complete my full term.
"I very much support the remit that the MPC has been given. It allows for the flexibility which is crucial in these tough times. I have much valued the independence given to me as an external member of the committee."
Darling wrote in reply: "I would like to take this opportunity to thank you for your major contribution to the work of the committee since 2006.
"In these difficult times, it is important that we have people that energetically put forward expert and challenging analysis and views to help shape the debate.
"I hope you will continue to make a significant contribution to the global economic debate in the years ahead."
Reader views (8)
Hopefully his buddies Brown and Darling will carry his bags back to America for him and decide to take a lifetime sabbatical themselves.
- Doug Watt, london e14
No loss, he a had a 'heads-up' from America, and failed to damp down credit demand.
No doubt a big taxpayer funded payout is headed his way
- Cap, London
Blancheflower was right all along. Now Brown will get the credit and millions will be set back 15 years as families truggling to survive and keep a roof over their heads. Brown will get credit from people who sway. These people are those that sit pretty. Brown has waited and done too little too late for the many but just enough to possibly save his ass... it is a tragedy the Blancheflower flagged and had the interest rate gone down in Jan 09 this situation will have been the better.
- Nick, piza
You'd think that someone who foresaw what has happened would have been urging higher interest rates to damp down the ludicrous levels of indebtedness. And a lot of people miles away from the corridors of power saw this coming years before 2006; the further you were, probably the easier it was to see, but he hardly goes away covered in glory.
- Mdj, Leyton, e10 london
Being based in America, guess he was forewarned of the disaster heading our way.
However doubt his logic on interest rate cut was correct - rather it should have been to tighten credit constraint.
Forgot - Gordon ( I saved the World) abbrogated this flexibility by mandating the BOE to control only inflation.
Monetry policy should have always been the perogative of government and not put at arms length in a quango
- Howard, Herts UK
Jumping from the sinking ship. At least he saw what was coming unlike the rest of the MPC who were still worrying about inflation.
- Zak, London
something about leaving a sinking ship perhaps?
- John Lowe, london UK
Good riddance. His record is atrocious.
- Roger Slade, Winchester, Hampshire, England
