Dr Alan Bollard New RBNZ Governor

Thu, 22 Aug 2002

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Treasury Secretary Dr Alan Bollard New RBNZ Governor

Finance Minister Cullen announced today that the Secretary to the Treasury, Dr Alan Bollard, will be appointed the next Reserve Bank Governor. Dr Bollard was nominated by the non-executive directors of the Reserve Bank Board and the nomination has been accepted by the government.

Confirmation of Dr Bollard's appointment will be subject to the conclusion of a contract of employment and to the negotiation of a new Policy Targets Agreement (PTA), which includes the definition of the inflation target band. The duration of this process is not certain at this stage, but we expect Dr Bollard to take up his new position by early October at the latest.

The government wants monetary policy outcomes to move closer to those of Australia. Dr Cullen stated that he will not change the top of the 0-3% target range, but did not rule out changing the bottom of the band. Dr Cullen had criticised the RBNZ earlier this year for implicitly having elevated the 1.5% mid-point of the target band to a medium-term policy target.

Regardless of the ultimate wording of the PTA and specification of the target range, it is our assessment that Dr Bollard will adopt a pragmatic approach to the running of monetary policy. That fits with our view that there will be no further RBNZ rate increases from the current level of 5.75% during this cycle. Growth momentum is already slowing and CPI inflation is expected to track down from currently 2.8% to 2% over the next year - an outlook that does not require any additional monetary policy pressure.

Curriculum Vitae - Dr Alan Bollard

Age: 51

Tertiary qualifications: BA in economics and mathematics, an MA (Hons) in economics, and a PhD in economics, from Auckland University.

1987-1994 Director of the New Zealand Institute of Economic Research (advising governments and companies on a wide range of applied economic issues).

1994 -1998 Chairman of the New Zealand Commerce Commission (the country's anti-trust and fair trading regulatory authority).

1998 - 2002 Secretary to the Treasury (government department that manages the Crown's finances and is the Government's principal economic adviser).

Ulf Schoefisch, Chief Economist, New Zealand

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