Former World Bank official takes Governor position at RBNZ
N.Z. Names Former World Bank Official Wheeler as RBNZ Governor
By Chris Bourke and Tracy Withers – Jun 26, 2012 1:50 AM GMT+0100
Former World Bank official Graeme Wheeler was appointed New Zealand’s next central bank governor, replacing Alan Bollard and inheriting a policy that has maintained record-low interest rates for 15 months.
Wheeler’s “extensive experience makes him a highly respected figure in world financial markets and within New Zealand,” Finance Minister Bill English said in a statement today. “We were fortunate to have someone of his caliber available for this important role.”
The Reserve Bank of New Zealand is weighing slower export growth as Europe’s fiscal crisis intensifies against the possibility that inflation will quicken next year as rebuilding accelerates from a series of earthquakes since 2010. The official cash rate has been 2.5 percent since March 2011, with a 62 percent chance of a rate cut before year end, according to interest-rate swaps data compiled by Bloomberg.
The local currency rose after Wheeler’s appointment was announced, buying 78.84 U.S. cents at 12:38 p.m. in Wellington from 78.71 cents immediately before. The so-called kiwi’s 4.6 percent increase this month is the biggest among Group of 10 currencies tracked by Bloomberg.
New Zealand’s central bank governor has sole responsibility for making rate decisions, and Wheeler is being appointed as Europe’s turmoil restrains consumer confidence and threatens to curb exports, which make up 30 percent of the economy. The RBNZ, among the first central banks in the world to adopt an inflation target, is required to keep consumer-price rises in a 1 percent to 3 percent range.
The government appoints the central bank chief on the recommendation of the RBNZ’s seven non-executive directors.
Wheeler, a New Zealand citizen, will be governor-designate until a new policy targets agreement is finished in the “next few months,” which is required before the appointment of a new governor, according to the statement. He is due to assume the role after Bollard’s term expires Sept. 25.
English said he doesn’t envisage any “major changes” to the agreement when Wheeler succeeds Bollard.
“However, the global financial crisis has focused some attention on monetary policy frameworks, and I want to ensure that the PTA continues to reflect best international practice,” English said.
Wheeler was employed by the World Bank from 1997 to 2010, according to the statement. He had been cited by local analysts in 2002 as a potential successor to previous RBNZ Governor Don Brash.
“We don’t foresee any changes in the conduct of monetary policy in the short term,” said Michael Gordon, a Westpac Banking Corp. (WBC) senior economist in Auckland, said in a research note today. He said Westpac expects the next rate increase in March, “once the new governor has settled in.”
New Zealand’s economy expanded 1.1 percent in the first quarter from the prior quarter, the most in five years, according to a government report on June 21. Still, consumer confidence fell in June to the lowest level in more than a year, ANZ National Bank Ltd. said June 15, citing a Roy Morgan survey of 1,040 people.
“Political and economic stresses in Europe, along with a run of weaker-than-expected data, have seen New Zealand’s trading partner outlook worsen,” Bollard said in a statement June 14 announcing no rate change. “The bank is monitoring euro-area developments carefully given the potential for rapid change.”
Wheeler, who played cricket for Wellington in 1982, worked at the Treasury Department for 24 years, including as director of macroeconomic forecasting and a five-year term as treasurer of the New Zealand Debt Management office. He currently lives in the U.S., where he operates his own advisory business, according to English’s statement.
Wheeler is 60 and was born in Hamilton on New Zealand’s North Island, according to an ESPN cricket website.
He was appointed treasurer of the World Bank in 2001 and became one of two managing directors in 2006. He stepped down from the role in June 2010.
The Financial Times reported in 2007 that Wheeler was the decisive voice that left Paul Wolfowitz with no option but to resign as president of the Washington-based poverty lender.
Today’s appointment is the fourth consecutive time since 1982 that the Reserve Bank has selected an external candidate. Bollard was the third straight external appointment when he moved to the RBNZ from the Treasury Department in 2002. Brash was chief executive officer of WestpacTrust, the local unit of Westpac, when he has named in 1988 and Spencer Russell was chief executive of the National Bank of New Zealand Ltd. when appointed in 1984.