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Wheeler named new Reserve Bank governor

06:00 AEST Wed Jun 27 2012
Graeme Wheeler
Graeme Wheeler
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Finance Minister Bill English has moved to cut off speculation of any big changes in monetary policy goal posts when Graeme Wheeler takes over from Allan Bollard as governor of the Reserve Bank of New Zealand.

Mr Wheeler will succeed Dr Bollard when his second five-year term expires on September 25, Mr English says. A new policy targets agreement (PTA) will be finalised in the next few months.

The Reserve Bank is required to deliver stability in the general level of prices and specific targets are set in the PTA signed by the finance minister and governor.

Greens co-leader Russel Norman says the negotiation of a new PTA with Mr Wheeler is an opportunity to give the central bank a broader mandate and a wider range of tools.

Critics say the Reserve Bank's current target is too narrow and has caused the New Zealand dollar to be too high, hurting exporters.

Mr English says he does not envisage any major changes to the PTA.

"I consider that the current PTA has served New Zealand well and there are benefits in maintaining consistency in the PTA.

"However, the global financial crisis has focused some attention on monetary policy frameworks, and I want to ensure that the PTA continues to reflect best international practice."

HiFX senior trader Stuart Ive told NZ Newswire it was unlikely that Mr Wheeler was going to come in "with guns blazing".

He said the PTA was unlikely to change much.

Mr Wheeler was "fairly untried in the field" of central banking, but was not expected to make major changes, he said.

Mr Wheeler is a former deputy secretary at the New Zealand Treasury and a former senior executive of the World Bank.

Grant Spencer, a deputy governor and head of financial stability at the Reserve Bank, had been seen as a leading candidate for the job.

Currently the Reserve Bank is required to keep the consumer price index in a range between 1 and 3 per cent on average over the medium term but external events can push it above or below this.