By David Milliken
LONDON (Reuters) - The Bank of England said on Tuesday that it had hired Barclays' (LSE:BARC) chief UK economist, Simon Hayes, to head its economic forecasting team, in a rare private-sector appointment.
Hayes, who worked at the BoE for eight years before joining Barclays, will draft quarterly economic forecasts for the central bank's rate-setting Monetary Policy Committee, as well as review the BoE's economic models.
The Bank's forecasts have faced criticism from British lawmakers and some economists in recent years for failing to predict the persistently high inflation and very sluggish recovery that has characterised the aftermath of the crisis - though few private-sector forecasts have been much better.
And now the forecasts are under even closer scrutiny, due to new governor Mark Carney's commitment not to raise interest rates before unemployment falls to 7 percent.
In August the central bank forecast this would take three years - a timescale that most private-sector economists thought was too long, given unemployment is 7.7 percent now.
However, in a Reuters poll before the BoE's October rate meeting, forecasts by Barclays were more in line with the BoE's thinking, with a prediction that it would take until the third quarter of 2016 before unemployment fell to 7 percent.
Barclays also forecast interest rates would not rise until the third quarter of 2016, and that the central bank would not restart its quantitative easing asset purchase programme.
In more recent forecasts published by Barclays on November 1, it predicts inflation and growth will average 2.3 percent next year. The growth estimate is close to the consensus among economic forecasters but slightly less than the 2.5 percent which the BoE expects.
No official start date has been set for Hayes, who will report to the BoE's chief economist, Spencer Dale. The BoE said the current head of its forecasting unit, finance ministry official Robert Woods, is due to complete his secondment at the BoE and return to work in government in the spring of 2014.
Hayes is making an unusual move by returning to the BoE after leaving for the private sector, as it is more common for BoE forecasters to leave for better paid jobs in London's financial sector. Hayes was not immediately available for comment on Tuesday.
Carney, himself a former Goldman Sachs banker, has made other external hires such as new chief operating officer Charlotte Hogg, an erstwhile Santander executive, and deputy governor Jon Cunliffe, a former British envoy to the European Union.
(Additional reporting by Andy Bruce and Jonathan Cable; editing by Ron Askew)
211