The political turmoil caused by Brexit has put two of the world’s leading central bankers off applying for the Bank of England governorship, according to two people close to the appointment process.
Neither Janet Yellen, former head of the US Federal Reserve, nor Raghuram Rajan, professor of economics at University of Chicago and a former governor of the Indian central bank, were part of the initial sifting process a few weeks ago.
“The Treasury couldn’t get Raghu or Janet to apply,” one person close to the process told the FT.
Philip Hammond, chancellor, said in a letter last year he was delaying finding a replacement for Mark Carney as central bank governor until “after the terms of the UK’s withdrawal [from the EU] and the framework for the future partnership have been finalised”.
The chancellor hoped that by getting Brexit out of the way, he could attract and appoint an international star that would “turn heads” at global meetings. But the continued lack of a deal meant that the next governor will be appointed while Britain is still in the middle of uncertainty over its future relationship with the EU.
People close to the process said a number of potential candidates the government had considered were not keen to get embroiled in the difficult politics of Brexit, something that is almost impossible to avoid as BoE governor.
The successful candidate will start an eight year term next February.
The chancellor last month considered and then rejected accelerating the process of finding the next governor, believing that it would not be appropriate for him to make the choice when he has only days left in the Treasury. Mr Hammond is expected to step down next week when Theresa May hands over to her successor as prime minister.
The failure to attract Prof Rajan, the bookmakers’ second favourite for the job, will be a blow to the incoming chancellor. His absence will boost the chances for Andrew Bailey, the bookies favourite and a former deputy governor, as well as current deputy governors Jon Cunliffe and Ben Broadbent. Other strong contenders include former deputy governor Minouche Shafik and Shriti Vadera, chair of Santander UK
An application from Ms Yellen would have been seen as a coup for Britain but it was always considered unlikely she would put herself forward.
Having been vetted by a search agency, applications closed in early June and everyone on the long list has been interviewed by a panel including senior Treasury officials and Kate Barker, the former BoE monetary policy committee member.
The panel has already drawn up a shortlist, which could be presented to the new chancellor as early as next week. The government has promised to name the new governor by the autumn.