Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
New Zealand has brought in a Swedish economist to run its central bank as it seeks to end a period of turmoil at the top of the institution and steer the country away from the brink of a “double-dip” recession.
Anna Breman, who has been first deputy governor of the Sveriges Riksbank in Sweden since 2019, will become the first female governor of the Reserve Bank of New Zealand when she takes up the role in December.
Her appointment follows a period of recent upheaval at the central bank, where her predecessor Adrian Orr abruptly stood down this year due to a disagreement with the government over the institution’s budget. Neil Quigley, chair of the central bank, also departed last month.
The RBNZ canvassed 300 candidates for the role, according to finance minister Nicola Willis, who in a statement on Wednesday praised Breman’s “impressive blend of technical skills and organisational leadership experience”.
Christian Hawkesby, who has been acting governor since Orr’s departure, will leave the bank once Breman takes up the post, Willis added.
Breman’s appointment comes as New Zealand’s economic recovery has stalled, with sharply higher unemployment, constrained household spending and declining house prices.
GDP data released last week showed a 0.6 per cent contraction in the second quarter on a year earlier, following an 0.7 per cent decline in the three months to March. Citi analysts warned that the country was “firmly flirting with a double-dip recession” and slashed its growth forecast.
Justin Murray, founder of stockbroker Murray & Co, said Breman was joining at a time when the RBNZ had been strongly criticised over the speed of its monetary policy decision-making, pointing to the weak second-quarter data.
“That’s the best proof the RBNZ got it wrong and should have done more earlier,” he said.
But he praised Breman’s experience in central banking as well as the private sector with Swedbank, saying the ability to attract a candidate of her calibre was a “strong endorsement of both the RBNZ and our economy”.
The RBNZ moved dramatically during the pandemic to tamp down inflation that surged as high as 7.2 per cent, raising interest rates by 5.25 percentage points from 2021-2023 before commencing a rate-cutting cycle in August last year.
Last month, the RBNZ cut interest rates a further 0.25 percentage points to 3 per cent with inflation running at the top of its target band of 1 to 3 per cent.
Breman, speaking to reporters after her appointment was announced, said she would focus on keeping inflation under control.
“You will not get strong growth and good employment levels in the medium term without having low and stable inflation,” she said.
Sharon Zollner, chief economist at ANZ bank’s New Zealand division, said Breman’s appointment was unlikely to result in a radical change to the central bank’s interest rate policy, noting that two further decisions were on the calendar before she formally takes up the role.
“The consequences for any given monetary policy decision of the change in stewardship is likely to be minimal,” she wrote in a note. But she added that the bank’s priorities, such as its capital requirements and its broader research agenda, could vary with the change in governorship.
