Finance Minister Steven Joyce and deputy Reserve Bank governor Grant Spencer have signed an unchanged policy targets agreement to cover the six-month transition after governor Graeme Wheeler departs on September 26.
Spencer has been named acting governor pending a permanent appointment. The interim PTA extends the central bank's requirement to keep annual inflation between 1 per cent and 3 per cent on average over the medium term, targeting the mid-point of 2 per cent. Wheeler failed to meet that target for eight quarters up until the fourth quarter last year, with inflation undershooting the target starting in December 2014, against a backdrop of weak global inflation and low oil prices.
Still, Joyce said in a statement that the existing PTA "has served New Zealand well and there are benefits in maintaining consistency in the agreement." The renewed agreement "will maintain continuity and stability in the monetary policy target over the election period and during the period of appointment of a new governor."
Wheeler's five-year term comes to an end on September 26 and his departure prompted a reshuffle at the bank, with deputy governor Geoff Bascand tapped to take charge of the monetary authority's financial stability function when Spencer steps into the governor role. The changing of the guard has also prompted some speculation the bank move away from giving the governor sole decision-making power over monetary policy decisions and see it move to a board decision model such as Australia uses.
At the time Wheeler's departure was announced in February, Joyce said the decision was made to appoint an acting governor in a caretaking role because of the proximity to the national elections on September 23 and the scheduled release of a monetary policy statement.