Sarah Breeden appointed deputy Bank of England governor

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Sarah Breeden, a senior Bank of England official, will succeed Sir Jon Cunliffe as the central bank’s deputy governor for financial stability in November, the Treasury announced on Tuesday.

The five-year appointment means Breeden will lead the BoE’s work on financial stability, chairing its Financial Policy Committee, which recommends actions to tame risks in the financial sector, in the governor’s absence. She will also sit on the Monetary Policy Committee that sets interest rates and on the Prudential Regulation Committee.

Breeden takes the role at a time of heightened financial stability risk in the UK. A sharp rise in interest rates threatens eventually to hit the banking system with higher defaults as fixed-rate mortgages expire and as households run down their savings to cushion against the higher cost of living. 

Officials are also concerned about risks for hedge funds, pension funds, private equity and other volatile corners of markets where prices have risen sharply and asset owners have borrowed heavily.

Breeden’s views on monetary policy are unknown. In her current role as executive director for financial stability strategy and risk, she has spearheaded the BoE’s work around so-called shadow banks — institutions spanning everything from investment funds to hedge funds and crypto — including the first markets stress test, which her team is leading.

She has also headed efforts to build resilience in the pensions industry following the crisis in liability-driven investment funds following the “mini” Budget last autumn and she has led the BoE’s domestic and international work on climate change.

Jeremy Hunt, the chancellor, said Breeden would bring “extensive experience” to the role, while Andrew Bailey, the BoE governor, said she would bring “a wealth of financial and economic policy knowledge”.

The chancellor’s choice of an internal BoE candidate for the role is a departure from previous practice: three of the four current deputy governors, including Cunliffe, spent much of their careers in the senior ranks of the Treasury.

Breeden, who will become one of four women on the nine-member MPC, joined the central bank as a graduate in 1991. Colleagues describe her as well-liked internally, where she is known for her keen attention to detail and sense of humour. She lives in Wimbledon and has two adult daughters. 

Mark Carney, the BoE’s former governor, said on Twitter that Breeden was a “fantastic choice”, describing her as “smart, decisive, cool under pressure” and a “foremost expert in financial stability, markets and climate”.

Simon Wells, economist at HSBC, said her appointment was unlikely to change the balance of opinion on the MPC, where BoE insiders have tended to be more hawkish than external members, making it unlikely that “a BoE lifer would become a trailblazing dove”.