Wealth fund chief Orr named New Zealand central bank governor

Bloomberg

Adrian Orr will oversee the biggest overhaul of New Zealand’s central bank since it pioneered inflation targeting in the early 1990s. Orr, 54, will begin a five-year term as governor of the Reserve Bank on March 27, Finance Minister Grant Robertson said in Wellington. A former deputy governor and chief economist at the RBNZ, Orr currently heads the New Zealand government’s sovereign wealth fund, which has swelled to more than NZ$37 billion ($26 billion) under his decade-long leadership.
Orr will be tasked with transitioning the RBNZ to a Fed-style dual mandate under the new Labour-led government, which plans to make full employment one of the bank’s primary aims alongside price stability. The New Zealand dollar jumped on Orr’s appointment as traders bet he won’t allow the twin goals to weaken the RBNZ’s inflation-fighting resolve.
“We have been wary of the dual mandate because it might make it harder for the Reserve Bank to raise interest rates when inflation is too high,” said Dominick Stephens, chief New Zealand economist at Westpac Banking Corp. in Auckland. “With Adrian Orr as governor, we would expect the Reserve Bank to remain realistic about what monetary policy can achieve in the long run.”
The New Zealand dollar rose half a US cent on the news and made further gains overnight. It traded at 69.16 cents at 8:05 a.m. in Wellington on Tuesday, up from 68.55 cents just before Orr was named.
“I wouldn’t want to classify him as a hawk or a dove,” said Stephen Toplis, head of research at Bank of New Zealand in Wellington. “He won’t want to kill off growth unnecessarily; he will equally understand the risks associated with having interest rates artificially low. He’s a realist.”
Orr inherits an economy in its ninth year of expansion, albeit as growth starts to slow.