Dominick Stephens, Research Analyst at Westpac, notes that Adrian Orr has been appointed Governor of the Reserve Bank of New Zealand, and will begin his five year term on March 27. This will be seen by markets as a balanced and credible choice, he further adds.
Key Quotes
“Adrian is currently Chief Executive Officer of the New Zealand Superannuation Fund. He has done two previous stints at the Reserve Bank - from 1997 to 2000 he was Head of the Economics Department, and from 2003 to 2007 he was Deputy Governor and Head of Financial Stability. Between those stints he was Chief Economist at Westpac, where a key part of his role was to monitor and forecast the Reserve Bank's actions.”
“While this is not an internal appointment, Adrian is closer to being a Reserve Bank insider than other recent Governors. Neither of the past two Governors had ever worked for the Reserve Bank before they were appointed, and Don Brash worked there only briefly as a graduate.”
“Adrian will start with an excellent understanding of the Reserve Bank and both of its key policy functions, monetary policy and financial sector regulation. He is well known as a strong communictor and is no stranger to the media, which bodes well for the clarity of communications with financial markets.”
“The key area of interest to us is how the new Governor will interpret the intended "dual mandate" - the Government's intention to have the Reserve Bank target both employment and inflation. The law won't be changed before Mr Orr starts, but the Policy Targets Agreement signed by the incoming Governor and the Minister of Finance will reflect the spirit of the impending law change, so the RBNZ's reform will presumably start immediately.”
“We have been wary of the dual mandate, because it might make it harder for the Reserve Bank to raise interest rates and rein in inflation when it is too high (since doing so could conflict with a directive to maximise employment). With Adrian Orr as Governor, we would expect the Reserve Bank to remain realistic about what monetary policy can achieve in the long run, while at the same time paying attention to employment over economic cycles.”
“The New Zealand dollar rose half a cent on the news of the appointment, and interest rates rose slightly.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.