A top central banker from the United Kingdom will take on the deputy governor job at the Reserve Bank of Australia, bringing experience and a fresh perspective to the task.
Andrew Hauser has spent more than 30 years at the Bank of England, the UK’s central bank, and served on the executive board of the International Monetary Fund.
Treasurer Jim Chalmers said the overseas recruit struck the right balance between “providing deep central banking experience and offering a fresh, global perspective to the work of the RBA”.
“Mr Hauser comes highly recommended for the position of deputy governor of the Reserve Bank, and his appointment will help ensure we have the most effective central bank to meet our current and future economic challenges,” he said.
Mr Hauser said he was “humbled and deeply honoured” to serve as the RBA’s deputy governor.
He is expected to start in time for the first cash rate meeting next year.
The deputy governor position was vacated when Michele Bullock stepped into the top job last month, replacing Philip Lowe as governor.
Ms Bullock said Mr Hauser would bring a “welcome external perspective” to the institution and the board.
Monash University economics lecturer Isaac Gross said Mr Hauser was a “really strong appointment” who would inject more financial markets expertise into the bank’s leadership.
He said the appointment showed the federal government was serious about changing the culture of the RBA and cutting through group think, as identified in the independent review released in April.
The deputy governor will be heavily involved in the shake-up of the institution in line with the probe’s recommendations.
Several changes have been made, such as the move to fewer meetings per year, and the treasurer plans to introduce legislation for a number of other reforms this week.
A major change that needs to be legislated is the creation of a board that will set official interest rates, while a governance board oversees the RBA’s operations.
The review also recommended ditching the mechanism that allows the treasurer to intervene in interest rate decisions to shore up the bank’s independence.
The veto power, outlined in the RBA Act, has never been used.
Dr Gross said the RBA would not be completely free of government intervention but the override power would be shifted from the treasurer to the parliament.
Either way, Dr Gross said such a power was unlikely to ever be used aside from a “break glass in an emergency” type situation where the institution “goes crazy”.
On balance, he said he would prefer the power remain in the hands of the treasurer who could act more quickly and draw on guidance from Treasury.
“The financial markets might crash faster than the parliament might intervene,” he said.
The Greens have criticised the changes to the government’s powers to intervene, with economic justice spokesman Nick McKim calling for ultimate responsibility to rest “with those accountable to the people, not unelected technocrats”.
“It is extraordinary that Jim Chalmers is proposing to give away his power to override interest rate rises put in place by the RBA,” he told journalists on Monday.
The federal opposition is waiting to see the final bill before outlining its position.
Shadow treasurer Angus Taylor has expressed concern about the treasurer’s approach to making board appointments in light of the review’s findings.
(Australian Associated Press)