Markets relieved that 'well known' Orr will head NZ
central bank
Send a link to a friend
[December 12, 2017]
By Ana Nicolaci da Costa and Charlotte Greenfield
WELLINGTON (Reuters) - New Zealand's
appointment of national pension fund chief Adrian Orr as the next
central bank governor was welcomed by investors who had feared that a
dual mandate under the new Labour-led government could have led to more
unorthodox monetary policy.
The new coalition government campaigned on a bid to make the economy
work for its people, putting housing and employment at the heart of its
political agenda.
As part of that, the government launched a review of the Reserve Bank
Act to add maximizing employment as a monetary policy goal alongside
inflation - in a historic move for the first central bank ever to adopt
an official inflation target.
Those plans, along with the finance minister's comments that he wanted a
governor that would adhere to the dual mandate, had sparked some worries
that the central bank could lose its focus on inflation, analysts said.

The appointment of Orr, a former deputy governor who also worked as
chief economist for the bank, appeased some of those concerns, pushing
the New Zealand dollar to a two-week high.
"Adrian is pretty well known in markets," said Michael Reddell, a former
RBNZ official who served with Orr on its monetary policy committee in
the 1990s.
"It's not someone who's totally flaky leftwing, because no one's had a
clear sense of who was in the running and it could have been someone out
of left field who is more strongly perceived as highly dovish."
The New Zealand dollar <NZD=D4> hit $0.6930 late on Monday against the
U.S. dollar, and remained close to those levels at around $0.6929 on
Tuesday.
The currency, the world's 11th most-traded, has fallen nearly 6 percent
since the September election brought in a more protectionist Labour-led
coalition in the first change of government for a decade.
"He's perceived as fairly level headed," said Stuart Ive, a Wellingon-based
dealer at OM Financial.
[to top of second column] |

A supplied photo shows New Zealand pension fund chief Adrian Orr,
who has been appointed the nation's new central bank governor, in
this photo taken July 31, 2014. NZ Superfund-Jamie Bowering/Handout
via REUTERS

"LARGER THAN LIFE"
Orr, who was RBNZ deputy governor for four years before joining the New Zealand
Super Fund in 2007, will take over from Grant Spencer on March 27.
Finance Minister Grant Robertson said on Monday that the laws to change the
bank's mandate would likely not be in force by March, but the policy target
agreement between him and Orr would be "developed in a manner consistent with
the direction of reform."
In November, Robertson told Reuters that willingness to focus on lifting
employment, alongside inflation, would be key in accepting the RBNZ's choice for
the next governor.
"I've been assured by the chair of the board that Mr Orr is in a position to do
that and that he will be able to manage a period of change well for the board
and I've accepted those assurances," Robertson told reporters on Monday.
In addition to his background both at the central bank and private banking, he
is considered to have strong communication skills - a must for a central bank
governor.
"He sometimes has got a very colorful turn of phrase, he uses metaphors in a way
which sometimes (is) very memorable," Don Brash, former RBNZ governor who
overlapped at the bank with Orr, told Reuters. "He is a very good communicator."
Reddell also praised his communication skills but said he could be too colorful
for some people.

"He's a larger than life character and whether you want governors that are
larger than life, people will have different views on that," Reddell added.
(Reporting by Ana Nicolaci da Costa and Charlotte Greenfield; Editing by Eric
Meijer and Kim Coghill)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |