Neil Quigley, Vice-Chancellor of the University of Waikato, is succeeding Rod Carr as chairman of the Reserve Bank's board of directors.
The Reserve Bank board's key function is monitoring the performance of Governor Graeme Wheeler and the central bank on behalf of Minister of Finance Bill English. It must assess whether quarterly Monetary Policy Statements are consistent with the Reserve Bank's Policy Targets Agreement between English and the Bank. It also monitors the Reserve Bank's six-monthly Financial Stability Reports.
Reserve Bank directors are appointed by the Minister of Finance for five-year renewable terms. They then and elect their chairman for one-year terms. The chairman appoints a deputy chairman for a one-year term. Kerrin Vautier has been appointed deputy chairwoman.
Carr won't seek a another term as a Reserve Bank director when his current term ends next July. Given this, he has decided to step down as chairman, the Reserve Bank says.
"Professor Quigley’s term as chairman is effective from 23 September 2016. Professor Quigley is Vice-Chancellor of the University of Waikato, and has previously held roles as a Professor of Economics and senior manager at Victoria University of Wellington and the University of Western Ontario in Canada. He was first appointed to the Reserve Bank Board in 2010. He is also a director of the New Zealand Qualifications Authority," the Reserve Bank says.
"Ms Vautier’s term is effective from 26 September 2016. Ms Vautier is a consulting research economist and a Lay Member of the High Court (under the Commerce Act). She was first appointed to the Reserve Bank Board in 2010."
Carr was Deputy Governor and Acting Governor of the Reserve Bank Between July 1998 and July 2003. Carr was appointed to the board in 2012, becoming chairman in September 2013.
English said Quigley had been elected unanimously by his fellow directors, and that Carr had successfully led the board through a challenging period during which the Reserve Bank’s role had widened to include its macroprudential framework and "active supervision of the banking and insurance industries.”
23 Comments
Lets hope Neil does a better job of monitoring Wheeler than Rod did.....
First thing i would ask him is how why on earth it is taking him over a year or two to bring in the Loan to Income Ratios.
Next question would be why he has allowed debt and house prices to get so out of control and thus putting the financial stability of the country at risk.
Third question is why he should be allowed to continue with his role given the above.
First thing
- Any new macro economic tools require a significant amount of policy design and forecast understanding. To demand them instantly is simply reckless and symptomatic of the poor planning of the majority of public institutions.
Next question
- The debt and house prices are not the RBNZ's fault. It is a Central Government failing through poor planning and policy. The RBNZ can only fight fires at this stage. It has no mandate to fix the structural issues that are at the heart of the issues.
Third question
- The RBNZ's organisational performance is not at fault. The inflation target isn't hitting its mandate, but you cannot put this down to reckless or poor organisational management. We have labour laws surrounding the restriction of employers to set employees up to fail. Why should this liberty not be afforded to Wheeler?
RBNZ, govenors past and present,and ofcourse the banks themselves have contributed significantly to the economic mess past & still present. Government for sure can take much of the rest of blame along with a shortsighted deluded proportion of the public. Everyone has their role to play to fix this, but it will take an huge change in values. Otherwise....the cliff we all go over and another ambulance at the bottom awaits for a selected few at the expense of the many
I feel that something is coming , yep, that is a fresh cowpat smothering. Nymad The RBNZ is substantially responsible , it is well aware of the increasing use of interest only loans and it is equally aware of the high DTI mortgages that speculators et al are using to ramp the market higher, it is equally well aware of the extremities within Aucklands household debt levels. To claim the RBNZ is not responsible for higher prices is abturd. To claim they have had insufficient time to model new macroeconomic tools is farcical.Ireland restructured its mortgage lending within 12 months The problem is one of decision making, in which the RBNZ failed and failed miserably during a substantive window period to act, whilst it was led around by its tail by 4 very large offshore banks Unfortunately the end game will play out only the timing need forecasting, which the RBNZ will unfortunately fail, as it has one of the worst forecasting records of any current central bank. Now that feels better
Someone wants to have their cake and eat it too.
I bet you would be complaining too if they raised overnight rates and killed the one trick pony dairy and tourism economy.
Of course they are well aware of the issues. If you listened to but 2 minutes of every policy update speech in the past two years, you would hear the RBNZ talk about the issues you mention them as being oblivious to.
You mention Ireland - wasn't that the country that suffered a huge credit crisis and as part of its bailout deal was required to restructure its financial system?
Because if so, doing something under duress isn't a good benchmark for evaluation. Plus the fact that they don't have full control of their monetary system also makes them significantly different to the RBNZ.
"...as it has one of the worst forecasting records of any current central bank."
Sources please.
If you read policy documents you would see that relative to other Central Banks, the RBNZ consistently outperforms the benchmark of private institutions within the economy to a degree that is relatively higher than other Central Banks.
But hey, lets not let facts get in the way..
Fact, Ireland discussed proposing new macro tools in relation to debt to income , and in regard to interest only mortgages in early 2014 , to avert a second period of runaway house inflation particularly in Dublin , which was at 25 percent and again threatening to weaken the financial sector . Fact , the measures were introduced in February 2015. Fact, real estate inflation in Dublin has dropped to zero, with the leafier parts negative. Fact , yes Ireland had to restructure its banks following the fall in house values starting in 2007, ( source Daft i.e) Fact a high NZD has not stopped tourists coming to and spending money in New Zealand. Fact if New Zealand raised its interest rates , the one trick pony that would suffer is most definitely not tourism , but something that we have 230 Billion in debt anchored to. Fact, the RBNZ has one of the worst forecasting records of all central banks, irrespective of whether it outperforms local private institutions . All this implies are that private institutions have a poorer record. I would suggest you review the RBNZ quarterly data in regard to its forecasts, to see how woeful its forecasts are , this being the same Central bank to raise interest rates four times then immediately backtrack and lower them four times . Fact seriously.
I never said Ireland didn't change it's lending restrictions. I was making the point that they haven't performed long term, yet, and don't really factor into the same argument given that the Central Bank of Ireland has a relatively different task to that of the RBNZ. You do realise that the Irish Central Bank doesn't control a money supply, right?
As such their policies such as financial institution governance need to be significantly different to regulate structural differences between Ireland and the rest of the Euro block.
Plus, very low to negative inflation in the housing market isn't something to be revered...I hope you realise this, if anything.
You do know also that all economic decisions are incentives, right?
To say that increasing the cost of something (especially a luxury good in tourism and milk products) has no impact on its demand is pretty counter intuitive. It does happen in some cases of elasticity, but generally those are essential goods.
I don't think the word "fact" means what you think it does..A high school level economics education would also do you a favour..
Again, I ask for your source on your 'facts' RE RBNZ's relative forecasting ability.
“Plus, very low to negative inflation in the housing market isn't something to be revered...I hope you realise this, if anything.”
How can any economy ever be stable if the cost of housing continuously inflates aboves wages and general inflation? Germany reveres it. It should be a policy of a healthy economy. What are they teaching you in economics 201?
I never said high inflation was good. I said that very low to negative inflation was bad in the case of housing stock.
The comparison with Germany is a bit weak but points out my concerns perfectly.
Germany is a nation of renters, with a very flat population growth over the past few decades. Pretty easy to maintain inflation stability with that dynamic.
It is likely that the low inflation incentivises non ownership due to the unwillingness to borrow to fund non appreciating assets in a market dynamic where the supply stock isn't very fluid or readily consumed.
With everyone so hung up on the 'generation rent' buzz, your argument doesn't really solve this predicament - creating a health economy.
FYI - ECON 201 is normally a microeconomics course, by memory. You want ECON 202, macroeconomics.
The confusion of the two distinctions could explain a lot.
Exactly. The regulated 35% capital risk weighting for banks' residential mortgage assets was introduced in 1983. Latterly, large Australian banks have been approved to self regulate these ratios with internally calculated values submitted to the RBNZ for rubber stamp acceptance down to ~25 %.
nymad,
I would have to agree that the housing crisis is primarily down to Government failure over many years. However,where I would fault the RB is in not acknowledging that it is virtually helpless in the face of the global forces acting to hold inflation down. Wheeler keeps insisting that it is only a matter of time before our inflation returns to its target point,but I just don't see that happening.
As you are an economist,I would be interested in your views on Behavioural Economics. I am a believer.
The Minister of Finance. Carr saw the writing was on the wall that heads had to roll (i.e. his 5 year term would not be extended) given the RBNZ constant failure in meeting its sole target.
English will probably not renew several of the directors so they get the hint it is time for Wheeler to go (if he is not doing his job they obviously are not doing theirs).
In this way the Govt still has some form of control over the Governor.
The Minister of Finance. Carr saw the writing was on the wall that heads had to roll (i.e. his 5 year term would not be extended) given the RBNZ constant failure in meeting its sole target.
The RBNZ board can hardly claim to be standing on the shoulders of giants.
The minister of finance has a publicly claimed bias towards fostering financial asset bubble instability, no matter what it takes.
New Zealand central bank Governor Graeme Wheeler needs to get inflation back to target and some observers think he has “plenty of room” to cut interest rates, Finance Minister Bill English said.
“People think he’s got plenty of room” to lower rates, said English. “His vocabulary is ‘data-dependent’ now isn’t it? So he’s got his first significant piece of data.” Read more
Heads should roll.... they have been talking about loan to income for years and still no action.... plenty of countries overseas such as uk to base off...
All excuses nymad..... they are responsible for the financial stability of NZ and with debt at 250billion growing at 8.8% a year and the highest house prices relative to incomes in the world then yes they are at fault.
The government also shares this resposnibility.
Even john Key told them to get a move on and he has the speed of a turtle.
http://www.newshub.co.nz/business/key-urges-reserve-bank-get-on-with-it…
That makes me laugh.
"Even John Key told them to get a move on and he has the speed of a turtle."
You are a politician's wet dream.
The quintessential reason as to why we would never want Central Banks to be publicly elected. Which no doubt you whimsically promote, also.
if i was chair of rbnz i'd be asking for a reversal of the obr, which may cause bank runs on the down cycle and i'd have less emphasis on using interest rates to control the exchange rates which has failed; i'd be demanding better oversight and lower risks around the mortgage market which makes up the majority of banks lending. currently a risky hodge podge of ineffectual policies have been allowed to develop
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