Finance & Business World

Spencer Dale, named the Bank of England's chief economist by Mervyn King yesterday, spent the last two years getting lessons on monetary policy from Ben S. Bernanke.

Dale attended most of the Federal Open Market Committee's meetings during his time as an adviser to the Fed, a period that covered the collapse of the subprime mortgage market. Before that, he was King's private secretary and led the U.K. central bank's economic-forecasting division.

King defeated calls from lawmakers to tap officials with experience in the finance industry, arguing that people within the bank should get a shot at promotion. Dale, one of only two policy makers appointed by King, joins the Monetary Policy Committee during the worst bout of inflation in at least 11 years. The other seven members are installed by the government.

“This is giving Mervyn more credibility,'' said Steven Bell, chief economist at GLC Ltd. and a former U.K. Treasury official. “You want the central bank to have more authority and this gives it a more hawkish tilt, but just a tilt.''

Dale, 41, replaces Charles Bean, who was promoted to deputy governor after helming the bank's economic research since 2000. The position of chief economist is more significant than at many central banks because the occupant votes on interest rates, and because the bank is obliged by law to meet an inflation target.

Bean, 54, began his fourth term on the rate-setting panel last June. In 93 rate decisions, he voted 16 times for a reduction, and eight times for an increase. He wanted lower rates than the majority in five of the six occasions he was outvoted by the committee.

King Unflinching

The rate-setting panel faces the most challenging period since its creation in 1997, King said this week. He said policy makers won't flinch in their fight to control to consumer prices, which will require economic growth to slow and living standards to slip. Inflation breached the government's 3 percent target in May.

“I am extremely pleased that the bank has been able to promote Spencer Dale from the immensely talented pool of economists we have within the bank,'' King said in an e-mailed statement yesterday. His stint at the Fed “will also bring valuable international experience,'' King said.

The Fed gave Dale a two-year appointment in June 2006 as an adviser to the Division of Monetary Affairs free credit report.com. The Bank of England requested Dale's assignment, aiming to broaden his experience.

Special Access

While it's not unusual for the U.S. central bank to welcome economists from its counterparts and allow its own staffers to take leave for overseas assignments, Dale was granted access most visitors don't get: He attended 12 of 16 regularly scheduled meetings of the interest-rate-setting FOMC and sat in specifically for discussions of changes to communicating the Fed's economic forecasts, according to minutes of the sessions.

Those talks culminated in the November 2007 announcement that the Fed would double the frequency of its policy makers' forecasts to quarterly, the same as the Bank of England. The Fed also added a third year to projections and now provides more- detailed explanations of risks to the outlook and historical accuracy.

Dale was awarded a masters degree in economics from the University of Warwick, the Bank of England said. He received his bachelors degree from the University of Wales. Dale is married with two children. He wasn't immediately available for comment.

Dale is “a very affable person,'' said Danny Gabay, an economist at Fathom Financial Consulting in London who formerly worked with him at the bank. “What strikes you about him is his unbridled energy and enthusiasm.''

Forecasting Team

Apart from his time in King's office, Dale worked closely with the governor when he led the bank's forecasting team.

Andrew Clare, professor of finance at Cass Business School in London and a former colleague of Dale's, compared the two of them to Ed Balls, the former Treasury adviser and now government minister, and Gordon Brown when he was chancellor of the exchequer. Balls helped devise the U.K.'s monetary policy framework.

“People at the bank have always said that he is the Ed Balls of the Bank of England,'' said Clare. “He is to King what Balls was to Brown,'' said Clare.

They don't agree on everything. Gabay says Dale supports Chelsea soccer club, while King is an avid fan of rival team Aston Villa.

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