Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets, Revised and Updated

Chapter 7

The Central Banker

Dr. Sushil Wadhwani

Former Monetary Policy Committee Member Bank of England Wadhwani Asset Management London

Dr. Sushil Wadhwani’s appearance is closer to a tenured university professor than a swashbuckling master of the universe, which is perhaps not surprising given his stature in financial academic circles. Wadhwani is of interest to this book for his academic perspective, but even more so for his insider’s view of central banking and interest rate policy making. Wadhwani performed his public service for several years as a member of the Monetary Policy Committee at the Bank of England (BOE) soon after it was made a politically independent institution. It seemed that the BOE was interested in having a financial markets practitioner in its ranks as it pulled away from government policy.

Reading central bank tea leaves is one of the most important components of global macro trading as interest rate policy ripples through world economies and affects most financial markets. Thus, a hedge fund manager who spent time inside the policy-making arm of a major central bank that macro traders follow in earnest was a man that I needed to spend time with.

In 1999, Wadhwani was selected by UK Chancellor Gordon Brown to replace Alan Budd as one of the four “outside” members of the nine-member policy-making group at the Bank of England. Prior to the BOE, Wadhwani worked for hedge fund legend Paul Tudor Jones as a proprietary trader, a role he came to after working ...