New Zealand's embattled central bank on Tuesday announced the appointment of an academic economist as its new chair.
Professor Neil Quigley was been elected chair of the Reserve Bank of New Zealand (RBNZ) board of directors, replacing Dr Rod Carr, at a time when the RBNZ is struggling against deflationary pressures, an overheated housing market and an overvalued New Zealand dollar.
Quigley is vice-chancellor of the University of Waikato, based in the North Island city of Hamilton, 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. Quigley appointed consulting research economist Kerrin Vautier as deputy chair. Finance Minister Bill English said Quigley, who was elected unanimously by the board, had a distinguished academic and consulting career.
In a statement, English thanked Carr, who was first appointed chair in 2013, for his service and leadership. "Dr Carr has successfully led the board through a challenging period during which the bank's ambit has widened to include the macroprudential framework and active supervision of the banking and insurance industries," said English.
Carr has overseen the expansion of the RBNZ's macroprudential responsibilities as it struggles to rein in the country's overheated housing market, which RBNZ governor Graeme Wheeler has repeatedly warned is a risk to financial stability.
Despite inflation tracking well below its target band of 1 percent to 3 percent, the RBNZ has been reluctant to cut the official cash rate (OCR) for fear of further inflaming the housing market. Moves over the last three years to curb mortgage lending through loan-to-value restrictions have drawn criticism that they are locking first-home buyers out of the market.
Announcing the RBNZ would hold the OCR at a record low of 2 percent last week, Wheeler said a decline in the exchange rate was needed. "The high exchange rate continues to place pressure on the export and import-competing sectors and, together with low global inflation, is causing negative inflation in the tradables sector," said Wheeler. "House price inflation remains excessive, posing concerns for financial stability. There are indications that recent macro-prudential measures and tighter credit conditions in recent weeks are having a moderating influence."
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