Interim Reserve Bank Governor Christian Hawkesby is being coy, as he undergoes a very public job interview in a bid to be appointed Governor for a full term.
“I don’t want to be seen as pitching for the role,” the former deputy told the Herald when asked why he believed he was the right person for the job.
He said there was a “good and thorough” process being run by the Reserve Bank board, which would suggest who Finance Minister Nicola Willis recommends the Governor General appoints.
Pushed to sell himself, Hawkesby said, “I’m not going to get into that. I’ll leave it there.”
Hawkesby recognised there were numerous other candidates.
“I think they should all be given their fair due right to be assessed.”
Others touted to be in the running include former Treasury chief economic adviser Dominick Stephens, Auckland University macroeconomics professor and Reserve Bank Monetary Policy Committee member Prasanna Gai, and Motu Research executive director John McDermott.
Stephens is seen to be a safe pair of hands. He has been the Treasury observer on the Monetary Policy Committee and has experience communicating with the public as Westpac’s former chief economist.
Gai is highly respected globally for his work in academia. He held leadership roles at the Bank of Canada and is a Financial Markets Authority director.
Similarly, McDermott is very well qualified and has experience as a former assistant governor and head of economics at the Reserve Bank.
There has also been talk of Bank of Canada deputy Governor Toni Gravelle being in the running. However, New Zealand doesn’t feature in his CV.
The coalition Government has (thus far, at least) appointed known entities to top jobs in the public sector. Secretary to the Treasury Iain Rennie and Public Service Commissioner Sir Brian Roche are examples of this.
The Governor role requires expertise in both economics and the regulation of financial institutions. The Governor also needs to be a good communicator and people manager as the head of a large organisation.
Hawkesby, who also co-founded Harbour Asset Management and held senior roles at the Bank of England, has experience in the above.
Being at the helm of the Reserve Bank since Adrian Orr’s sudden resignation in March, he has been leading a major restructure in line with the bank receiving less funding than it anticipated last year.
Since Orr’s departure, the Reserve Bank board has also followed the wishes of the Government by reviewing whether its bank capital rules need to be loosened.
Hawkesby was instrumental in the design and rollout of these rules, as the Reserve Bank’s former head of financial stability. The rules make banks stronger, but have been criticised by Willis and other members of the coalition Government for increasing the cost of borrowing.
Members of the Government have also been critical of the Reserve Bank’s Covid response, which Hawkesby played a key role in.
This said, Willis and Prime Minister Christopher Luxon were beaming on Wednesday, when the Monetary Policy Committee cut the Official Cash Rate (OCR) by 25 basis points to 3%, and signalled its intention to give the economy a shot in the arm by cutting the rate more in the future than previously expected.
Speaking to the Herald about this decision on Thursday, Hawkesby was pleased the market interpreted the committee’s statement as dovish. Indeed, swap rates, mortgage and term deposit rates, and the New Zealand dollar fell.
Hawkesby recognised the committee signalling its intention to eventually cut the OCR to 2.5%, and making it clear that two of its members wanted the OCR to be cut by 50 basis points (rather than 25 basis points), was powerful in moving the market.
He stuck by the committee’s July decision to keep the OCR on hold, in the face of uncertainty caused by tariffs.
However, he conceded that in May he should not have said he had “no bias” going into the July meeting.
This comment confused some observers, making them question the Reserve Bank’s commitment to seeing the OCR fall.
“I think if I had my time again, I probably wouldn’t have said that,” Hawkesby said, owning up to a misfire in a way his predecessor rarely did.
Hawkesby explained he was “surprised” by the chilling effect uncertainty caused by the United States’ tariffs had on New Zealand households and businesses in April, May and June.
“That’s the news that we’re responding to now,” he said.
“That’s the signal to us that interest rates need to go lower to help support the economy and that recovery that needs to happen.”
Hawkesby clarified all six Monetary Policy Committee members agreed on the quantum of OCR cuts required. However, their views differed when it came to how quickly to make the cuts.
Hawkesby said the committee’s central projection was for 25-point cuts in October and November.
“But we’ve got optionality depending on how the data pans out.”
The Monetary Policy Committee will have a new external member when it meets in October, as Bob Buckle’s term has just ended.
Willis is expected to announce this appointment, as well as the full-term Governor, in coming weeks.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.