New Zealand central bank head to step down after general election

The head of New Zealand's central bank is to step down in September after navigating the country's finance sector through some of its toughest challenges in modern times.

Reserve Bank of New Zealand (RBNZ) governor Graeme Wheeler said Tuesday he would not seek a second term when his current five-year term ends on Sept. 26.

Wheeler has overseen the RBNZ's handling of the ongoing housing crisis, repeatedly warning that soaring home prices were posing a risk to the country's financial security, and a stubbornly high New Zealand dollar, which it has described as unjustifiable and unsustainable.

With inflation tracking near zero for much of the last two years, the RBNZ was failing to meet its inflation target range of 1 percent to 3 percent until the consumer price index edged up to 1.3 percent in the last quarter of last year.

However, the RBNZ's inclination to stimulate demand by lowering its official cash rate (OCR) -- currently at an historic low of 1.75 percent -- was stymied by the fear of driving soaring house price inflation in Auckland, the country's biggest city and home to a third of the population.

Wheeler headed the introduction of new mortgage lending curbs in order to shield the commercial banks against the effects of a sudden correction in the house market.

"It has been a great privilege to serve in this role, and in the remaining eight months I will remain fully focused on the economic challenges and opportunities facing the New Zealand economy," Wheeler said in a statement Tuesday.

He worked at the World Bank from 1997 until 2010, where he held the posts of managing director operations, vice-president and treasurer, and from 2010 to 2012, he ran his own advisory business in the United States.

Minister of Finance Steven Joyce said he had appointed deputy governor Grant Spencer as acting governor for a period of six months at the end of Wheeler's term.

Spencer also serves as chair of the OECD (Organisation for Economic Co-operation and Development) Committee on Financial Markets, and has held senior management positions at the RBNZ in economics and financial markets.

Joyce said Wheeler's term as governor ended three days after a general election, so an acting governor would cover the post-election caretaker period, and give the next government time to decide on the appointment of a governor for the next five-year term.

Joyce and Spencer had agreed there would be no change to the Policy Targets Agreement while Spencer was acting governor.

Spencer had advised the government that he would not apply for the permanent role, and intended to retire following his period as acting governor.

Joyce thanked Wheeler for his service to the RBNZ.

"The governor has performed his role calmly and expertly during a highly unusual period for the world economy. I thank him for his service up until now and for the remainder of his term as governor," Joyce said in a statement.

source: Xinhua