Finance Minister Bill English has announced that Graeme Wheeler will replace Alan Bollard as the new Reserve Bank Governor later this year.

Bollard will step down after his second five-year term expires on September 25.

Wheeler's extensive experience has made him a highly respected figure in world financial markets and within New Zealand, English said.

"We were fortunate to have someone of his calibre available for this important role."


The Reserve Bank board of directors recommended Wheeler's appointment to English after an extensive recruitment process domestically and internationally.

"Given his experience and standing, combined with his technical and leadership qualities, the board considered that he has all the qualities required to become governor and chief executive of the Reserve Bank," English said.

Wheeler was employed by the World Bank from 1997 to 2010, his most recent roles included managing director operations from 2006-2010, and vice-president and treasurer from 2001 to 2006.

He was previously at the New Zealand Treasury as deputy secretary and treasurer of the Debt Management Office.

Wheeler is a New Zealander but currently lives in the United States where he runs his own advisory business.

Goldman Sachs economist Philip Borkin said today's announcement may come as something of a surprise to markets given that Deputy Governor Grant Spencer was the "favourite" for the the role.

"While Mr Wheeler's experience looks impressive, he is somewhat of an unknown in monetary policy circles," Borkin said.

"Nevertheless, this announcement continues the recent tradition of candidates being appointed from outside of the RBNZ."

Borkin expected Wheeler's first official announcement to be the OCR Review on October 25.

"Mr Wheeler's appointment adds some uncertainty to the monetary policy outlook, particularly given that the RBNZ Governor is sole decision maker over the OCR.

"It will take some time for markets to build up an understanding of how Mr Wheeler thinks about the NZ economy and its drivers."

The Reserve Bank was likely to begin "a gradual tightening cycle" from the second quarter of 2013, taking the OCR to 3.25 per cent by the end of next year.

Westpac chief economist Dominick Stephens said he did not foresee any short-term monetary policy changes as a result of Wheeler's appointment.

"We expect the first OCR hike in March 2013, once the new Governor has settled in."

The bank had no indication of how Wheeler's approach to monetary policy will differ from Bollard's, Stephens said.

The Policy Targets Agreement (PTA) he will need to negotiate and sign with the Finance Minister by September would offer some crucial clues.

As Wheeler did not have central banking experience, it appeared leadership qualities were a key consideration in his appointment, Stephens said.

Wheeler will be governor-designate until a new policy targets agreement is finalised in the next few months. This is required before a new governor is appointed.