(27 June 2012 – New Zealand) Former World Bank managing director Graeme Wheeler is to be the new Reserve Bank of New Zealand (RBNZ) Governor.Wheeler will take over at the end of Alan Bollard’s second five-year term on 25 September according to Finance Minister Bill English.
‘We expect the first official cash rate hike in March 2013, once the new governor has settled in,’ Westpac chief economist Dominick Stephens said.
Wheeler’s selection as an outsider was a ‘notable move’ and could point to an agenda for more substantive changes at the RBNZ.
‘Both the previous governors, Don Brash and Alan Bollard, were surprise choices, and both were brought in with a mandate for changes in how the Reserve Bank operates.’
Stephens believes leadership qualities are the key consideration over central banking experience.
Wheeler’s appointment was an opportunity for the Government to broaden the number of tools the RBNZ could use to manage monetary policy rather than relying only on official cash rate changes, New Zealand’s Green Party co-leader Russel Norman said.
‘The Reserve Bank’s one-tool toolkit is plainly inadequate for the economic reality we live in,’ Norman said.
‘Currently, the Reserve Bank faces a dilemma. If it cuts interest rates, it risks another housing bubble. Instead, it has done nothing, which causes a high exchange rate, hurting exporters and domestic producers.’
As required under the Reserve Bank Act 1989, the Reserve Bank board of directors recommended Wheeler’s appointment to English, after a recruitment process domestically and internationally.