Former Reserve Bank governor Don Brash. Photo: RNZ / Cole Eastham-Farrelly
Former Reserve Bank governor Don Brash is optimistic a new appointee to the role will bring transparent communication, but says monetary policy isn't likely to change much.
Indeed, ructions at the top levels of the central bank and a stalled economy this year will have the government hoping the appointment can act as a stabilising force.
Finance Minister Nicola Willis' announcement on Wednesday - Sweden's Dr Anna Breman would be the Reserve Bank governor from December - confirmed the rumours the highly influential role would be filled for the first time by a woman, and a foreigner.
Dr Brash told RNZ he was not expecting to see any radical policy changes at the bank.
"The economy is very weak, deflation is slightly higher than the bank would wish it to be," he said.
"But the framework is clearly established [and] the priority for getting inflation under control is also clearly established so I don't expect any radical change in policy from her."
While he didn't know her personally, her credentials spoke for themselves.
"She has many of the qualifications which should make her a very good governor and clearly, the field was looked at very carefully, because the board looked at a number of people," he said.
Finance Minister Nicola Willis and the new Reserve Bank governor Dr Anna Breman. Photo: RNZ / Mark Papalii
He had hoped the role would be taken by a New Zealander, but said the Swedish central bank and New Zealand's had a lot of similarities.
"She comes from a central bank which, like the Reserve Bank of New Zealand, has been focused on inflation targeting for a considerable time," he said.
"Ironically, when the Labour government of 1999 decided to review the Reserve Bank of New Zealand Act, they called in a Swedish economist who later became a deputy governor of the Swedish central bank to review us. So there's been some affinity between the two models, or two frameworks, if you like, for quite a while."
Brash did expect there to be a change in communication style.
"The previous governor had a communication style which was distinctively his," he said.
"I welcome the fact that she said she wants to get out and talk to people in the community. I think that's hugely important for the governor and I'm not sure that the previous governor did that as much as was desirable."
Independent economist Cameron Bagrie. Photo: RNZ / Alexander Robertson
Independent economist Cameron Bagrie told RNZ while it was good to finally get someone in the job, people should not expect to a see a "tectonic shift".
"The Reserve Bank is an institution, they operate within a framework that extends way beyond one person," he said.
"Could we expect, because we've got a new governor, any sort of shift in tone in regard to how they're going to conduct monetary policy? I think the short answer is no.
"How they make their interest rate decisions is all about a committee, it's not one individual, such as we had back in the 1990s."
Bagrie said the economy had suffered structural damage over 10 to 15 years, and while people might try to blame the Reserve Bank or the government, it was a matter of timing.
"We've got a whole lot of structural problems, whether you look at cost of energy or gas, whether you look at infrastructure, our roading needs, whether you look at the education system, you cannot fix those problems overnight - they tend to take an awful long time," he said.
Westpac chief economist Kelly Eckhold. Photo: Newshub
Westpac chief economist Kelly Eckhold said Dr Breman's push for more transparency and clearer communication was not a surprise, given the Riksbank were pioneers in that regard.
"They've been working quite hard on that for decades now, I think they were one of the first to implement these fan charts, for example, to give people a sense of the uncertainty around forecasts - a long, long time ago, before anyone was doing it," he said.
"The Riksbank does seem to have more transparency arrangements around various bits and pieces of monetary policy, which were things that we thought that the reserve bank should consider here as well."
Victoria University of Wellington associate professor Martien Lubberink said Sweden was also similar to New Zealand in having relatively high capital requirements for commercial banks.
"Nicola Willis indicated that she wants to have a revision of the capital ratios here or the capital requirements here, with an eye on probably lowering them, so there may come some tension here, between Anna and Nicola in this case."
Bagrie, however, said that matter was likely to end up with a more lenient approach than Orr had been pursuing.
"Is the New Zealand banking system going to end up with low levels of rigourous capital requirements - the answer is no.
"But we're going to end up, I think, with a less strenuous regime than what the previous governor was pursuing."
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