Having attended Rossall Junior School, Rachel went on to graduate from Girton College, Cambridge University, with an MA before obtaining an MSc in economics from the London School of Economics.
Her career started at HM Treasury, where she worked on a range of macroeconomic, monetary, and financial issues. She was Principal Private Secretary to the Chancellor of the Exchequer, Nigel Lawson, in the mid-1980s and as his Deputy Chief Economic Adviser in the early 1990s. In 1994, she was head of the Economic and Domestic Secretariat at the Cabinet Office.
From 1995 to 1996, Rachel was a vice president and chief of staff to the World Bank President before moving over to the Welsh Office, where she oversaw the setting up of the National Assembly for Wales. She then went on to become permanent secretary of the Department for Work and Pensions and from 2003 to 2008 she was a Deputy Governor at the Bank of England.