Reuters US Economy
By Lucy Craymer
WELLINGTON (Reuters) -New Zealand on Wednesday named Swedish national Anna Breman as its new central bank governor, the first woman in the role who joins following a major shakeup at the bank amid criticism over its management of the economy.
Finance Minister Nicola Willis said Breman, currently the First Deputy Governor of Sweden's central bank, the Riksbank, will take up her role at the Reserve Bank of New Zealand (RBNZ) on December 1.
"Dr Breman comes to New Zealand with an impressive blend of technical skills and organisational leadership experience," Willis told a press conference in Wellington.
Breman, 49, used her first remarks to praise the New Zealand bank's reputation, following the surprise departure of its previous governor who repeatedly clashed with the government.
"The Reserve Bank is an excellent institution: it's known globally for being the first to develop inflation targeting," she told reporters.
"Staff are dedicated, they are loyal. They know how important the institution is to New Zealand."
Breman was nominated for the role by the RBNZ board following a worldwide search in which 300 potential candidates were identified, Willis said.
RBNZ board deputy chair Rodger Finlay welcomed Breman's appointment.
"Anna's experience spans central banking, academia and financial markets," he said.
"She has strong technical knowledge within monetary policy, financial stability and payments systems after several years at the Executive Board at the Riksbank and an extensive international experience."
FIRST FEMALE GOVERNOR
Breman, who is married with two teenage daughters, is the first foreign national appointed to the role in its modern history.
While central banks globally typically choose local talent for their top roles, the appointment of a foreigner to a governor role is not unheard of with the Bank of England appointing Canadian Mark Carney as governor in 2012.
New Zealand, which was the first self-governing country to give women the vote 135 years ago and has had three female prime ministers, has never had a female central bank governor. Karen Silk is currently Assistant Governor at the RBNZ.
"It certainly makes a difference when young women and girls can see that there is no office that cannot be occupied by a woman," Willis said.
Breman will replace current RBNZ Governor Christian Hawkesby, who was appointed to the role for six months in April following the surprise resignation of former governor Adrian Orr. Hawkesby will also leave the bank and step down from the RBNZ's monetary policy board.
Orr, who had a reputation as a maverick policymaker and sometimes wrong-footed financial markets with policy decisions, had faced criticism in recent years for being too slow to cut rates to bring the economy out of a deep recession.
"The Reserve Bank has found itself behind the curve over the last couple of years," Jarrod Kerr, chief economist at New Zealand's Kiwibank.
"We hope we get some leadership that brings the Reserve Bank ahead of the curve, rather than being reactive. We would like a central bank to be a bit more proactive."
Orr quit over a dispute with the government about punishing cuts to the central bank's budget, and had clashed repeatedly with Willis.
The centre-right government has become more vocal in other areas, with Prime Minister Christopher Luxon publicly saying he had told the RBNZ what he believes they should do with interest rates.
RBNZ's chairman also resigned in August following criticism of the bank’s handling of Orr’s departure.
"We are opening a new chapter today, a new chapter in New Zealand's history and a new chapter for Reserve Bank," Willis said.
New Zealand's main opposition Labour Party also welcomed Breman's appointment, with economics spokesperson Barbara Edmonds praising her "impressive background".
NEW CHALLENGES
The tense backdrop had heightened market focus on how the new governor would go about defending the central bank's independence from a critical government and restoring the reputational damage done by a deep economic downturn.
Breman's confirmation comes just months after funding for the bank was significantly cut by the government, forcing a restructure with around 20% of its staff expected to be laid off.
Her first policy meeting will not be until February. Before that, the RBNZ conducts meetings in both October and November, for which markets are currently pricing a total of 58 basis points of rate cuts.
The RBNZ is reviewing bank capital requirements, following public criticism of changes announced in 2019 championed by Orr. Critics contend the regulations reduced availability of funds in the economy and led to extra costs for borrowers.
The central bank has cut the benchmark cash rate by 250 basis points since August last year in an effort to shore up a frail economy and recently flagged further cuts.
(Reporting by Lucy Craymer in Wellington, additional reporting by Stella Qiu in SydneyWriting by Alasdair Pal; Editing by Sam Holmes)
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