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New central bank governor to maintain consistent new zealand monetary policy: gov't

New central bank governor to maintain consistent new zealand monetary policy: gov't Source:
Date: 27-06-2012
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WELLINGTON, June 26 (Xinhua) -- The New Zealand government Tuesday dampened speculation of a change in monetary policy with its announcement that former World Bank official Graeme Wheeler is set to be the next governor of the country's central bank.

Finance Minister Bill English said he intended to appoint Graeme Wheeler governor and chief executive of the Reserve Bank of New Zealand (RBNZ), after Alan Bollard's second five-year term expired on Sept. 25.

Wheeler would be governor-designate until a new policy targets agreement was finalized in the next few months, English said in a statement.

"Mr. Wheeler's extensive experience makes him a highly respected figure in world financial markets and within New Zealand, " English said.

From 1997 to 2010, Wheeler worked at the World Bank, holding the posts of managing director operations (2006-2010), and vice- president and treasurer (2001-2006).

Previously, he was at the New Zealand Treasury as deputy secretary and treasurer of the Debt Management Office.

Wheeler, a New Zealander, currently lived in the United States and ran his own advisory business, said the statement.

The RBNZ board of directors recommended Wheeler's appointment to English, after an extensive recruitment process domestically and internationally.

"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," English said.

English did not envisage any major changes to the policy targets agreement (PTA), which included a target inflation range of 1 percent to 3 percent.

"I consider that the current PTA has served New Zealand well and there are benefits in maintaining consistency in the PTA.

"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 paid tribute to outgoing governor Bollard for his leadership at the RBNZ over the past 10 years.

"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," said English.

However, the opposition Green Party said Wheeler's appointment was an opportunity for the government to adopt a modern monetary policy.

Green Party co-leader Russel Norman said the RBNZ's "one-tool toolkit" of curbing inflation was plainly inadequate for the economic reality.

"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," Norman said in a statement.

"The negotiation of a new policy targets agreement between Mr. Wheeler and the Finance Minister is an opportunity to give the Reserve Bank a broader mandate and a wider range of tools," he added.
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