Monday 11th December 2017
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(Updates to add comment on Orr's salary and ministerial comments throughout)
New Zealand Superannuation Fund chief executive Adrian Orr has been named the next Reserve Bank governor, starting in late March 2018.
Finance Minister Grant Robertson announced the appointment today which is effective from March 27 and based on a unanimous recommendation from the Reserve Bank board. Orr will take up the role as the new Labour-led administration stamps its own mark on the central bank with a review of its governing legislation.
The kiwi dollar jumped to 68.87 US cents from 68.54 cents immediately before the announcement, which Robertson said would see Orr take a "significant pay cut" from his current role, which is paid around $950,000 a year and the then Finance Minister, Bill English, opposed in 2015 and constituted a 36 percent pay rise.
Orr's salary at the central bank would be "in the range of the current governor", whose most recent salary has been reported to be around $660,000 a year. Orr, who served as a deputy governor of the Reserve Bank until taking his current role at the Super Fund in 2007, replaces former World Bank deputy head Graeme Wheeler, who stepped down in September.
"Mr Orr has the technical and leadership qualities required to be governor and CEO of the Reserve Bank," Robertson said in a statement. "Further, I consider that he has the skills necessary to successfully lead the Bank through a period of change."
Robertson said he had ensured the board of the Reserve Bank was aware that whoever was appointed to replace Wheeler would accept the new government's policy of targeting not only inflation but also the level of unemployment when setting monetary policy.
Reserve Bank chair Neil Quigley said Orr had "significant breadth of knowledge across central and commercial banking, economics, financial markets and regulation" and with his executive experience at NZ Super Fund, was a unanimous choice for the board.
Robertson said he will sign a new policy targets agreement with Orr in March, and by the time Orr starts, the first phase of its review of the Reserve Bank Act will be substantively completed.
"While it will not be possible to pass legislation to amend the act to reflect any changes from the review before the PTA is signed in March 2018, we will ensure that the new PTA is developed in a manner consistent with the direction of reform," Robertson said. "If necessary, the PTA will be revised again after the act has been amended to reflect any changes from the review that cannot be reflected within the provisions of the current Act."
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