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Veteran Treasury man to head Reserve Bank

Former World Bank Managing Director Graeme Wheeler will be the next Governor of the Reserve Bank of New Zealand.

He will succeed Dr Alan Bollard whose term at the top post ends in September.

Dr Bollard announced on January 30 that he would like to be relieved of the post when his term ends on September 25 after serving two terms in the top banking post (Indian Newslink, February 15, 2012).

A New Zealander, Mr Wheeler currently lives in the US, running his own advisory business.

Following his tour of duty at the World Bank (1997-2010), Mr Wheeler has held a number of important posts including Vice-President and Treasurer (2001-2006) and Managing Director Operations (2006-2010). He was earlier Deputy Secretary and Treasurer of the Debt Management Office at the Treasury.

As required under the Reserve Bank Act 1989, the Board of Directors of the Bank recommended Mr Wheeler’s appointment, after an extensive recruitment process in New Zealand and abroad.

According to Bloomberg, the change in leadership could be a turning point for interest rates, which have been held at 2.5% since March 2011.

“According to Bloomberg interest-rate swaps data, there is a 62% chance of a rate cut before the end of the year.”

That view was somewhat consistent with a statement made by Finance Minister Bill English while announcing the appointment of Mr Wheeler.

“Mr Wheeler will be governor-designate until a new Policy Targets Agreement (TPA) is finalised in the next few months. This is required before a new Governor is appointed,” he said.

However, Mr English did not envisage any major changes to the Policy Targets Agreement (PTA).

“I consider that the current PTA has served New Zealand well and there are benefits in maintaining consistency in the PTA. But 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,” he said.

Mr English said that Mr Wheeler’s extensive experience made him a highly respected figure in world financial markets and within New Zealand.

“Given his experience and standing, combined with his technical and leadership qualities, the Board considered that he has all the qualities required to become Governor and Chief Executive of the Reserve Bank,” he said.

Mr English also paid tribute to Dr Bollard for his leadership.

“He helped steer the New Zealand financial system through the biggest global crisis in several generations. At the same time, he ensured that this country continued to enjoy one of the most stable inflation environments in the world.”

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