The new governor will not be in place for the next rate decision on Oct 8, with their term expected to start towards the end of the year
[WELLINGTON] New Zealand is set to appoint a woman to head its central bank for the first time as it seeks to refresh an institution damaged by leadership turmoil, according to a source familiar with the matter.
In another twist, the new Reserve Bank of New Zealand (RBNZ) governor is a foreigner, the source said, asking not to be named, discussing market-sensitive information. They would not identify the new governor.
Finance Minister Nicola Willis may make the announcement as soon as Wednesday (Sep 24) in Wellington following an extensive global search to replace Adrian Orr, who left in March under a cloud. A spokesperson for Willis declined to comment.
The appointment comes at a critical juncture for the RBNZ after data last week showed the economy slumped in the second quarter, increasing pressure on policymakers to cut interest rates more aggressively. The new governor will not be in place for the next rate decision on Oct 8, with their term expected to start towards the end of the year.
The appointment may help to wipe the slate clean after Orr’s shock exit triggered months of controversy and further departures, including that of board chair Neil Quigley.
Willis will be making history by appointing the RBNZ’s first-ever female governor, an important evolution for a bank that pioneered inflation targeting but has lagged peers in inclusiveness at the highest levels.
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The appointment of a woman from overseas is unexpected, with speculation centring on Orr’s deputy and interim governor Christian Hawkesby and Auckland economics professor Prasanna Gai, who sits on the Monetary Policy Committee (MPC) as an external member.
A media report in July suggested Toni Gravelle, one of three deputy governors at the Bank of Canada, was the frontrunner for the job.
The governor chairs the MPC, which sets interest rates with the aim of keeping inflation around the 2 per cent midpoint of a 1 to 3 per cent target range over the medium term.
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In August, the committee cut the Official Cash Rate to 3 per cent and projected it would fall to 2.5 per cent by the end of the year. But data last week showed the economy slumped 0.9 per cent in the three months to June, prompting some economists to predict a 50 basis-point cut at next month’s decision and a 2.25 per cent cash rate by the end of the year. BLOOMBERG
